On February 24, improving cotton demand, optimism in U.S. cotton exports, and strong demand for oil crops supported cotton prices to continue to strengthen, and ICE futures once again hit a two-and-a-half-year high. Traders are awaiting Thursday’s weekly U.S. cotton export report to bring new news on the demand side.
The Federal Reserve continues to keep the federal benchmark interest rate near 0 and has no concerns about inflation. Powell said it could take more than three years for inflation to reach the Fed’s target, suggesting the central bank will tolerate any post-pandemic price increases and keep interest rates on hold well into the future.
Affected by this, commodities were in full swing that day, and the three major U.S. stock indexes rebounded sharply. The strength of the external market also provided support for the rise in cotton prices. ICE futures May contracts closed up 102 points, reaching a new intraday high of 93.69 cents.
Currently, the demand for U.S. cotton is very good. This year’s export signing progress has increased by 19 percentage points year-on-year. There is still room for reduction in U.S. ending stocks. This Thursday’s weekly US cotton export report will bring new guidance on the demand side.
Looking at the situation next year, the ending inventory in the United States is expected to decrease by 500,000 packages year-on-year. With expectations of huge returns from corn, soybeans, sorghum and winter wheat, it will be difficult for the U.S. cotton area to increase in 2021, which will provide support for cotton prices next year.
Technically, the ICE futures May contract remains strong, with the next target price being 100 cents. The trend of the May cotton contract is similar to that of the May soybean contract. Since the end of July last year, it has only closed below the 30-day moving average once. Currently, the 30-day moving average for the May contract is 85.33 cents, well below the current price of over 90 cents. </p
