On January 24, the global geopolitical situation attracted attention in the cotton market. Whether the Fed’s interest rate hike meetings on Tuesday and Wednesday will be affected by this, and what attitude the Fed will take towards this matter and inflation deserves attention.
On the 24th, although the Dow Jones index fell by more than a thousand points, ICE cotton futures closed only slightly lower. The driving force for the decline in the U.S. stock market was the impact of the global geopolitical crisis on the market, and it is true that cotton futures can remain strong under such circumstances. It’s a bit unexpected.
On Tuesday and Wednesday this week, the Federal Reserve will hold a two-day interest rate meeting, and Powell will announce the final decision on Wednesday. The market generally believes that the Federal Reserve will raise interest rates several times this year, and the interest rate increases will lead to a stronger dollar. The U.S. dollar index rose to a nearly two-week high on Monday, which also put pressure on the cotton market.
In addition, traders continue to focus on U.S. cotton exports. Judging from last week’s report, the volume of U.S. cotton contracts is pretty good. This year’s cumulative promised sales of U.S. cotton have reached 11.267 million bales, lower than the 12.16 million bales in the same period last year, but higher than the average of 11.035 million bales in the same period in the past five years. And sales will increase significantly next year. US cotton shipments are slowly improving, which also shows that the supply chain crisis is gradually being resolved. Analysts said that even at current prices, there is still good demand for U.S. cotton.
The latest CFTC position report shows that funds’ net long positions increased by 844 hands last week, and net long positions increased to 77,608 hands. It is understood that China and Pakistan continue to purchase US cotton, and the tight supply chain situation continues to support cotton prices. Overall, demand from textile mills in China, India, and Pakistan is weak, and the industrial chain needs time to digest the rising cotton prices.
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