On May 14, ICE cotton futures closed sharply lower again under the pressure of speculative long liquidation profits. The early rise in cotton prices was mainly driven by the strength of Chicago grains. However, the sharp correction in the grain market in recent days has put great pressure on cotton. Corn futures once fell to the limit on the 14th. In addition to external market factors, the continued decline in U.S. cotton exports last week and the continued improvement in weather in Texas in the coming week also led to a decline in cotton prices.
The weather forecast shows that there will be rainfall in most parts of Texas in the next 1-5 days. The rainfall in the western region is expected to be close to 40 mm, and the rainfall in the southernmost part is close to 75 mm. In the next 6 -The rainfall in various places was relatively high in the 10 days, and the situation will be similar in the next 8-14 days.
As of the week of May 6, the number of contract signings in the United States this year continued to decline, and the number of contract signings in the new year exceeded the current year. This is the first time this year. As of May 6, U.S. cotton exports in 2020/21 reached 15.267 million bales, lower than the 15.924 million bales in the same period last year, but higher than the average of 13.465 million bales in the same period in the past five years, completing 101.5% of the USDA export forecast. The average over the same period in the past five years was 103.1%.
According to analysis, the positive USDA supply and demand forecast for the new year last week did not bring enough impetus to price increases, and speculators may be withdrawing from the cotton market. As rainfall continues to increase in western Texas, the market’s upward momentum has significantly weakened. However, there are still a large number of unpriced contracts in the July contract. With the sharp correction in prices, buying support will appear below the market. </p
