On April 5, ICE cotton futures tried to reverse the downward trend of the previous trading day, and some traders once again speculated on the US cotton area. Although the USDA estimates that the US cotton area is 12 million acres, many market participants do not agree with this figure. According to USDA’s intended area, corn and soybeans were significantly lower than market expectations, and the market believed that there should be a substantial increase, which triggered a sharp increase in soybean and corn prices.
According to the CFTC’s position report, as of the week of March 30, funds had a net purchase of 5,056 lots, and the net long number was 54,135 lots. Analysts believe that some traders believe that the fund selling has come to an end, so they have recently begun to re-enter the market to hunt for dips. Regarding last week’s weekly US cotton export report, although the number of contracts signed was embarrassing, the cumulative export volume has reached 14.577 million bales, completing 102.9% of USDA’s forecast, compared with 93% for the same period in the past five years.
According to data from the U.S. Department of Labor last Friday, nearly 1 million U.S. jobs were added in March, far exceeding market expectations of 625,000. Currently, about 40% of people in the United States have received at least the first dose of the vaccine, and traders and analysts believe that the U.S. economy will gradually regain its vitality. However, the problem remains serious in other countries, with India hitting a new high in a single day.
On that day, the weakness of the US dollar and the record high of the US stock market attracted speculative buying by cotton traders. The dollar index fell to a one-week low as U.S. stocks hit record highs and U.S. Treasury yields stayed below recent highs, though analysts said lower liquidity, with markets closed for the Easter holiday in many parts of the world, may have amplified the greenback. of decline. Strong U.S. jobs data boosted bets on a swift U.S. economic recovery and pushed U.S. stock indexes to record highs, also helping cotton futures.
Peter Egli, director of risk management at British commodity company Plexus Cotton, believes that the supply and demand situation in the United States is tight and new cotton production is still uncertain, as western Texas is still waiting for rainfall, which may push High cotton prices. Bailey Thomen, head of cotton risk management at StoneX, said cotton is recovering from last Thursday’s levels but is still generally testing its direction. Cotton’s short-term price trends may be affected by technical graphics, but in the longer term, prices are likely to rise as the market focus returns to the fundamental outlook for next year, which points to tighter market supply. </p
