On January 18, after the three-day long holiday, ICE cotton futures opened somewhat weakly, and traders were a little afraid of the stock market decline caused by interest rate hikes. Next week the Federal Reserve will decide on its plan to raise interest rates in an effort to control inflation. Affected by this, the U.S. dollar index rebounded early Tuesday morning.
The latest CFTC report shows that fund net long positions decreased by 3,513 lots last week to 76,764 lots, but it is still a very high level. Affected by the US holiday on Monday, this week’s relevant reports are postponed by one day, and the US cotton export weekly report will be released on Friday. In last week’s report, US cotton contracts reached 400,000 bales, indicating that the purchasing interest of importing countries is still very high.
On the 18th, ICE cotton futures closed sharply higher, with the main March contract standing strongly above 120 cents. This was the first time since June 2011. With the strong support of fundamentals and the good performance of U.S. cotton exports, ICE cotton futures can still rise strongly in the face of the 600-point drop in the Dow Jones Industrial Average.
From the current perspective, the global logistics crisis is expected to ease, and there is no need to worry too much about order cancellations. There had been concerns that China would cancel purchases if cotton could not be shipped for export, but so far, this has not happened.
The U.S. dollar index closed higher on Tuesday, as currency traders expected the Federal Reserve meeting next week to formally launch an interest rate hike plan. On Wednesday, the U.S. Department of Commerce will release data on new housing starts. If the data increases, it means that business demand for cotton has increased.
In addition, the continued rise in international oil prices is also beneficial to cotton consumption. Oil prices continued to rise by more than 1% on Tuesday, and the rebound in the oil market also increased the appeal of cotton. Analysts believe that cotton’s bullish trend remains unchanged, U.S. cotton demand remains strong, and the energy market continues to provide support. Currently, international oil prices are at their highest level since 2014. In addition, the Fed’s interest rate hikes may prompt funds to move out of the stock market and into commodities, further pushing up prices.
</p
