On July 16, after experiencing a technical retracement caused by the poor weekly export report the day before, the ICE futures December contract returned strongly, knocking on the door of 90 cents again.
It is understood that the recent news that new cotton in the United States has suffered losses due to continuous heavy rainfall has prompted cotton merchants to increase the psychological price of their purchases. There are reports that continued heavy rains have hindered the root growth of new cotton flowers in the United States, slowed the growth of new cotton, and caused many cotton fields to be flooded. August is a critical period for new cotton production. There is still a big question mark whether new cotton can complete self-rescue or deteriorate further in the later period. Weather forecasts show that temperatures will be low but rainfall will be high in Texas in the next 6-10 and 8-14 days, with similar conditions in the Delta and Southeast regions.
As of now, the cumulative volume of U.S. cotton exports in 2020/21 has reached 16.151 million bales, which is lower than the 16.034 million bales in the same period last year, but higher than the 144.33 million bales in the same period in the past five years. The average value is 107% of the USDA export forecast, which is higher than the average value of 111% for the same period in the past five years. The cumulative volume of U.S. cotton export contracts in 2021/22 reached 2.721 million bales, a year-on-year decrease of 349,700 bales, which is the lowest level in the same period since 2015/16.
The latest data shows that U.S. retail sales unexpectedly increased by 0.6% month-on-month in June, while May’s data was revised to -1.7%, exceeding the previously announced -1.3%. As the United States reaches 70% universal immunity, travel-related consumption such as clothing, catering, transportation, entertainment, etc. has seen positive growth.
Technically, cotton prices will continue to test upward and break through 93 cents (the highest settlement price of the front-month contract this year). Short-term adjustments may be needed before rising again. </p
