On May 19, ICE cotton futures fell sharply, and rain in Lubbock, Texas, cooled the market again. The forecast for the next 1-5 days shows that there may be rainfall every day this week, but there may be less rainfall in western Texas in the next 6-10 days.
In addition to the rain in Texas, the overall slump in the external market also dragged down cotton prices. The US Dow Jones Index, metals, grains and other commodities have all pulled back sharply, and the market is firmly controlled by some kind of bearish sentiment.
This week’s US cotton export weekly report is the focus of the market. In the past two weeks, U.S. cotton export sales have been very bleak, and some importing countries are still suffering from the problems caused by the new crown epidemic. Although U.S. cotton exports have fulfilled 100% of USDA’s forecast so far, the market still needs to see more U.S. cotton exports to China before it will be reassured.
On that day, the U.S. dollar index strengthened, and China’s policy of controlling cryptocurrencies caused shocks in many cryptocurrency markets, including Bitcoin. Bitcoin plummeted 30% overnight. It is reported that the Chinese government has banned financial institutions and payment companies from providing services related to cryptocurrency trading and warned investors not to engage in speculative crypto trading. While there is no direct correlation between Bitcoin and cotton, the ultimate goal of Bitcoin and related digital values is to replace paper currency, and the decline of cryptocurrencies did send shockwaves to financial markets and caused the U.S. dollar index to rise.
Affected by the above negative factors, ICE cotton futures closed lower. Currently, ICE futures are quite “comfortable” between 80 and 85 cents. Unless there is a strong stimulus, the price range is likely to consolidate. As the trading in May gradually comes to an end, the market begins to look forward to the USDA’s June supply and demand forecast, and more importantly, the actual sown area report on June 30. By then, it will be known how many cotton fields corn and soybeans have occupied. </p
