On December 6, ICE cotton futures rose sharply, driven by the Dow Jones Industrial Average. Recent news about Omicron states that the mutated strain has not spread widely in Africa, and more time will be needed to clarify the specific situation.
Judging from last week’s CFTC position report, funds sold a net 6,050 lots, and their net long positions dropped to 77,743 lots. The number of long positions of other hedging and large speculators also decreased.
On December 6, ICE cotton futures closed sharply higher, and the surge in the Dow Jones Industrial Average and energy prices drove the financial markets to collectively chase the gains. It is reported that Saudi Arabia increased the price of crude oil last weekend, causing the price ratio of chemical fiber and cotton to change, while the reduction of “Omicron” concerns prompted the U.S. stock market to rebound.
The 2021 USDA crop report has stopped being released. The important reports this week are Thursday’s December supply and demand forecast and the weekly U.S. cotton export report. Generally speaking, the December and January reports have little impact on the market. Last month, the U.S. Department of Agriculture reduced U.S. cotton production, resulting in a corresponding decrease in ending stocks. In terms of U.S. cotton exports, the number of U.S. cotton contracts increased significantly last week, but shipments are still sluggish, and the problem remains the global supply chain crisis.
As the market’s concerns about the “Omicron” mutant strain subsided, the financial market quickly recovered, and OPEC also had confidence in the market. Under the influence of the rebound in the external market, cotton prices are expected to continue to stabilize.
According to the analysis of foreign futures experts, in the past ten years, funds have increased long positions in cotton seven times from the end of November to March. In two of the other three times, the price of cotton was more than 60 cents, and cotton supply exceeded demand. Clearly inconsistent with the current situation. At present, although funds have some liquidation behaviors, they have not yet truly shorted the market. As prices stabilize and virus concerns are eliminated, U.S. cotton demand may be released in the later period, pushing cotton prices to continue to rise.
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