The Big Rise Of Cotton At The Beginning Of The Year Surprised Market People

On February 20, despite the positive news over the weekend, ICE cotton futures had a sharp correction. Since January, cotton prices have risen sharply. At present, technical figures have been overbought. Last Friday, speculators took profits before the arrival of the small and long holidays, foreshadowing the market on Tuesday.

According to the CFTC report, the fund bought 25000 contracts in the latest week, and the long position increased to more than 715.59 million, the previous high was 101500.

According to the survey of NCC, the intended area of the United States in 2024 is 9.8 million acres, lower than the 11 million acres of USDA Agricultural Outlook Forum. According to the calculation of NCC's intended area, the US cotton output in 2024 is estimated to be 14.6 million bales, and the USDA Agricultural Outlook Forum is estimated to be 16 million bales, both significantly higher than the 12.4 million bales this year.

On Tuesday, in order to stabilize the real estate market and promote domestic economic development, the People's Bank of China announced to cut the five-year loan interest rate by 25 basis points, which is the largest adjustment since 2019 and greatly exceeds market expectations. The reduction of loan interest rate will have an important impact on the real estate market and loan costs.

On February 20, ICE cotton futures fell sharply, and no one bought it in the market. There has been no adjustment in cotton technology graphics since January, and the sharp increase in the long positions of the fund has prompted some long profits and some speculators to sell at high prices.

This week's US Cotton Export Weekly was postponed to Friday due to the President's Day holiday on Monday. The contracted volume of American Cotton last week was 160000 bales, lower than the market expectation, which was also one of the incentives for the market selling on Friday. The market paid attention to this week's export report. According to market feedback, the turnover in the international spot market during the Spring Festival was very light, and it was difficult to continue to provide impetus for the rise of cotton prices.

The big rise of cotton at the beginning of the year surprised the market people. However, from the perspective of the situation of the whole year, after the downturn of the previous two years, cotton demand is expected to rebound, cotton prices are expected to show an upward trend, and the short-term market may enter the shock consolidation stage.