Last week (June 12-25), the reduction of macro pressure (the stabilization of the US dollar and the recovery of US stocks) allowed cotton fundamentals to control the market. With U.S. cotton demand improving, U.S. cotton area uncertain, growth still in doubt, and market supply tight before the launch of new cotton in the northern hemisphere, ICE futures rose slightly.
The U.S. cotton sown area report will be released on Wednesday (June 30), U.S. time. According to a Reuters survey, 17 analysts expected the average US cotton area to be 11.856 million acres, with a specific range of 11.50-12.4 million acres. The intended US cotton area in March was 12.036 million acres. Obviously, the market expects the actual sown area of US cotton to decrease. It is worth mentioning that among the 17 analysts, only two expected the area to exceed 12 million acres, and two expected it to be 12 million acres. The rest believed it was less than 12 million acres.
In recent weeks, U.S. cotton growth has greatly recovered, mainly due to widespread and long-lasting rainfall in Texas. As the proportion of Texas with good conditions has increased significantly, the rejection rate in Texas this year will not be very high. Therefore, the US cotton production forecast in July may be increased, depending on the actual sowing area in June.
Cotton sowing in northern India is advancing rapidly, and the area is expected to increase year-on-year. Some analysts believe that the expansion of cotton planting areas in Gujarat and Maharashtra, the states with the largest output, is mainly due to rising cotton prices and continued increases in MSP prices. The overall planting expansion is expected to be 5%. At present, India’s monsoon rains are developing northward and have entered most parts of Gujarat. The cumulative rainfall since this year’s rainy season is higher than normal.
The early harvest of new Brazilian cotton has begun (early sown cotton in Bahia and Mato Grosso), with very good yields in Bahia and very good yields in Mato Grosso Not bad. At present, only early-sown cotton has begun to be harvested, and individual quality problems that have occurred in the early stage will not have a major impact.
As of June 18, there are nearly 50,000 unpriced contracts for the December ICE futures contract, 21,300 contracts for the March contract, and a total of 120,000 contracts. Therefore, the price point during the decline in cotton prices will provide support for the market.
Technically, the retreat to 63 cents in mid-June should have ended. As long as the December contract maintains this price, the cotton price will exceed the 88.50 cents set in the early stage of the July contract, or even exceed A new high of 89.28 cents was reached. </p
