On February 7, ICE cotton futures fell slightly after opening, as traders awaited Wednesday’s USDA supply and demand report. Markets expect this month’s report to lower U.S. and global ending inventories.
On the same day, oil prices consolidated near last weekend’s settlement price. The Biden administration on Friday restored sanctions on Iran and allowed the international nuclear organization to conduct investigations. If the United States lifts sanctions on Iran, Iran will increase crude oil exports, thereby increasing global supply.
On February 7, cotton futures were still undergoing large-scale rollover behavior. The March contract fell by 1% under pressure, while the December contract rose steadily. Overall, the market may remain consolidated or dip slightly before the USDA supply and demand report is released.
The U.S. dollar index traded slightly higher on Monday as traders remeasured Friday’s employment data. Data from the U.S. Department of Labor showed that non-farm payroll employment exceeded 450,000, much higher than market expectations of 150,000, which may have an impact on the Federal Reserve’s decision to raise interest rates. As of now, the Fed is likely planning to announce a rate hike at its March 16 meeting.
According to the latest CFTC position report, fund net long positions increased by 4,466 lots last week to 80,862 lots. As funds roll over and contracts switch, the main ICE futures contract may see a correction to a certain extent. At the same time, the far-month December contract continues to rise steadily under the influence of drought in Texas, and the price difference between the near- and far-month contracts will gradually narrow.
Overall, the current demand for cotton continues to remain strong, and in the absence of a “black swan” event, cotton prices will continue to remain strong.
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