On August 25, ICE cotton futures consolidated within a narrow range, with traders waiting for the latest news on the epidemic, weather and the situation in Afghanistan. The situation in Afghanistan may have an important impact on the trend of the US dollar, and the worsening of the global epidemic may once again affect clothing demand.
In terms of weather, there will be light to moderate rain in the Delta and Southeast regions of the United States in the next 1-5 days, but there will be no rain in western Texas. Most cotton-producing areas will have rainfall in the next 6-10 days. The excess may be related to the upcoming tropical storm. At the same time, the temperature in cotton-producing areas will be significantly higher. News about tropical cyclones is causing market concern. The National Hurricane Center predicts that the low pressure system now located in the Caribbean may develop into a more complete Atlantic storm and enter the western Gulf of Mexico by Sunday, where conditions may be conducive to further development and is expected to move toward southern Texas. Moving along the coast, the harvesting Rio Grande river basin is under threat. In 2017, Hurricane Harvey brought a devastating blow to the early harvest of new cotton in Texas. As of the end of last week, 14% of the new cotton crop in the United States had been spun.
On August 25, ICE cotton futures closed slightly higher amid expectations of an increase in U.S. cotton exports and disturbances from weather factors. The possibility of a tropical system moving into the central Texas coast is pushing prices higher, traders said. While signs for crop quantity and quality are positive this season, any sudden changes in weather in key growing areas of western Texas could pose significant yield challenges. Farmers in the region are rushing to harvest in anticipation of the storm.
As for U.S. cotton exports, although China has begun to increase its purchases of U.S. cotton, it is still unclear what role China will ultimately play in the current international situation. On August 25, the U.S. dollar index fell again. Traders paid close attention to the Federal Reserve’s statement on raising interest rates. Some analysts believe that the Federal Reserve will announce the start of taper, that is, it will begin to reduce the purchase of U.S. Treasury bonds. Currently, the Federal Reserve purchases approximately US$120 billion in Treasury bonds every month. . Limiting cotton’s gains is a stronger U.S. dollar, which could make cotton more expensive for buyers holding other currencies, hurting demand. </p
