On January 3, ICE cotton futures rose sharply on the first trading day of the new year. Chicago Board of Trade (CBOT) soybean futures ended higher on Monday, while global stock markets started the new year in an upbeat mood, with U.S. and European stocks rising strongly on Monday.
On the same day, the strength of the US Dow Jones Index and oil prices boosted cotton prices, and the market continued to have optimistic expectations for cotton demand. However, the subsequent rise in the US dollar index inhibited the rise in cotton prices. ICE cotton futures rose nearly 170 points during the session and then gave up the gains, closing only up 63 points.
Traders expect that U.S. cotton exports will still perform well last week. As of now, U.S. cotton signings in 2021/22 have reached 10.45 million bales, lower than the 11.38 million bales in the same period last year, but lower than the average of 10.347 million bales in the same period in the past five years. Keith Brown, head of Keith Brown and Co. in Georgia, said that U.S. cotton exports are still good and China is the largest buyer of cotton. Although the dollar’s rise of 70 points is quite extreme, overall cotton’s fundamentals are quite solid.
In 2021, ICE cotton futures rose by 34.48 cents throughout the year, a year-on-year increase of 44%. Although uncertainty remains in Sino-US trade relations, the market continues to expect increased import demand from China. As the first phase of the Sino-US trade agreement expires on December 31, 2021, it is worth paying attention to what actions will be taken at the Sino-US trade level in the first quarter of 2022. In the four quarters of 2021, China has been the largest buyer of US cotton.
Entering the new year, cotton supply and demand will undergo new changes, but the fundamentals at this stage remain solid, and other factors such as supply chain crises, Chinese demand, inflation, increased production costs, monetary policy, and weather will all give the United States Impact on cotton production.
From the technical graphics point of view, although cotton prices achieved a good start in the new year, they failed to fill the gap left on November 24, which disappointed the bulls. In the short term, this is the first step that cotton prices must break through if they want to continue to rise. Louis Rose of Rose Commodity Group said that technically, the March cotton futures contract will encounter resistance around 115-116 cents in the near and medium term, and will encounter resistance at 100-102 cents, 95-96 cents and 90-92 cents. Get support nearby.
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