Last week (February 15-19), ICE cotton futures continued to rise, driven by a series of positive factors such as factory pricing, fund buying, good U.S. cotton exports, a stronger commodity market, a falling dollar, and recovery in consumption. .
The USDA Agricultural Outlook Forum made preliminary forecasts for the cotton market in 2021/22. In the United States, cotton planting area is expected to decrease to 12 million acres in 2021 year-on-year, but harvested area is expected to increase significantly by 15%, yield is expected to increase by 1.8%, and total output is expected to increase to 17.5 million bales.
Globally, the global cotton planting area will increase by 2.9% in 2021, with the United States, Pakistan, Australia, West Africa and Brazil all increasing. The global total output is expected to increase by 4.7%, reaching 119.5 million bales. Global consumption is expected to increase by 4.1% to 122 million packages, depending on the economic situation after the epidemic. Overall, the cotton market will be optimistic in the later period. Of course, these positive factors may have been reflected in prices in advance.
Judging from the U.S. cotton export weekly report, although last week’s data dropped significantly, China continued to maintain a large number of signings before the Spring Festival. Overall, the overall performance of the major U.S. cotton export markets is still good. It is worth noting that textile mills have accumulated a large number of price point contracts for May and July contracts, but the rising ICE futures have forced factories to postpone price points. Sooner or later, a large number of price points will be completed, and then the cotton price will only If it can continue to rise, it may advance towards 100 cents, but sooner or later the price will be too high and demand will be frustrated.
Currently, the U.S. Department of Agriculture expects U.S. ending stocks this year to be 4.3 million bales, but analysts generally believe it will drop to 3.5-3.8 million bales, so the ICE futures December contract is also rising. The USDA Outlook Forum predicts that U.S. ending stocks in 2021/22 will continue to decline to 3.8 million bales, which is enough for the new flower December contract to stand at 80 cents. However, market participants believe that U.S. ending stocks will fall below 3 million bales, perhaps as low as 2.3 million bales.
In addition, China’s Zheng cotton futures have repeatedly broken through the resistance price, which will also have a great impact on ICE futures. At present, the profits of textile mills in China and India are very good. Although they may decrease in the future as prices rise, demand is at least very solid at this stage. If this year’s contract rises to 100 cents, the new December contract will reach 90 cents. </p
