Last week (April 5-9), ICE cotton futures rebounded after falling sharply. After more than a month of in-depth adjustments, a technical bottom may have been established, and it is expected to gradually rebound in the future, especially the December contract, which has greater potential. U.S. cotton exports still provide support for the market, and USDA has also raised its forecast for global cotton imports. The reduction in U.S. cotton area and rising grain prices are both positive for cotton prices.
The USDA estimates that the intended cotton planting area in the United States in 2021 will be 12.036 million acres, basically the same as last year, and 500,000 acres higher than the NCC’s forecast. Texas accounts for 56% of the total. %. Due to the ongoing drought in the Texas Plains region of the United States, which accounts for more than half of the total area of Texas, prices have the potential to rise. At the same time, soybean and corn prices are still strong and have a tendency to rise further, so cotton needs to follow suit, otherwise the cotton area will continue to decline. From the end of March to the end of June, the change in US cotton area was plus or minus 1 million acres.
Last week’s USDA supply and demand forecast continued to provide support to the market. U.S. exports were increased by 250,000 bales, ending stocks dropped to 3.9 million bales, global consumption increased by 400,000 bales, and imports increased by nearly 1 million bales, of which China increased by 750,000 bales. With the inventory of old cotton in the United States bottoming out and the production of new cotton uncertain, China may have no choice but to choose Brazilian cotton if it wants to import a large amount of cotton.
Last week’s U.S. cotton export weekly report showed that the number of contracts signed in the United States this year increased to 277,000 bales in the week ending April 1, and the number of contracts signed in the next year increased by 49,000 bales, and the shipment volume also increased. rose to 383,000 bales. As of April 1, the cumulative sales volume of U.S. cotton (shipped + unshipped) reached 14.847 million bales, which was 103% of USDA’s latest export forecast.
From a technical perspective, the price adjustment that started at the end of February should have ended. Cotton prices are expected to gradually move up in the later period. The important points for the May contract are 84.30 cents and 88.50 respectively. cents. At any stage, as long as the price falls below 77.12 cents, it means that the previous high of this year has been formed. </p
