On May 18, ICE cotton futures reversed again on Tuesday. The main reason was the restorative rise in the external market. At the same time, traders believe that rainfall in western Texas on Monday did not reach the expected level.
It is understood that although there was some heavy rainfall in western Texas on Monday, strong winds and tornadoes also occurred. Overall, they were sporadic and scattered, and the wind and rain came and went quickly. Weather forecasts show that the probability of precipitation in western Texas will decrease again over the next ten days.
The latest report shows that as of May 16, 38% of new cotton planting in the United States has been completed, which is lower than the 42% of the same period last year and the average of the same period in the past five years (40%). Sowing in Texas is 35% complete, down from 45% at the same time last year, but higher than the average for the same period in the past five years (34%). Georgia, the second largest cotton-producing state, has planted 37%, lower than the 39% in the same period last year and the average of 45% in the past five years.
On the same day, the U.S. dollar fell for the fourth consecutive trading day, hitting its lowest level against a basket of currencies since late February, which also provided support for cotton. Technically, the December contract was somewhat oversold in the short term, and the price did not continue to fall further the day before, so some traders chose to cover their short positions.
The number of new housing starts in the United States in April released by the U.S. Department of Commerce on Tuesday was significantly lower than expected, possibly due to soaring raw material prices. In April, the number of new housing starts in the United States fell by 9.5% to 1.569 million units. At the same time, March’s data was revised down to 1.733 million units, but it was still the highest since June 2006.
Currently, traders are waiting for this Thursday’s U.S. cotton export report to provide guidance. In the past two weeks, the volume of U.S. cotton contracts has dropped significantly, and the July contract has begun to come under pressure. If it continues, there will be strong resistance to cotton prices rising again. </p
