Can Cotton Prices Continue To Rise?

 

Experts generally believe that China has enough procurement. The worry now is that cotton prices could only rise to 65 cents again if China buys in large quantities. At present, the fluctuation range of ice futures is 57.50-65 cents. The price of ice futures has tried to break through 65 cents for many times, but failed every time. This shows that the resistance of this price is very big. If it fails again, cotton price may fall to 61 cents or even try 57.50 cents support. If the fund does not see the possibility of breaking through 65 cents, it will exit the market soon.

  

Several experts said the USDA's August supply and demand forecast once again showed that global cotton supply was abundant and consumption was weak. With the increase of global end-of-term stocks, global cotton supply has fully met demand before the new cotton harvest in 2020 / 21. At the end of the period, the sharp increase in inventory of cotton in the United States and the major countries in the United States are expected to increase significantly in inventory at the end of the period. For the United States, cotton production increased from 17.5 million bales to 18.1 million bales, but did not significantly reduce production due to Hurricane and drought as expected by the market, indicating that the quality of American cotton seed is continuously improving, so the unit yield of American cotton reached a record 938 lb / acre. There has been a huge leap in the production of these new varieties, keeping American cotton competitive.

 

Nevertheless, industry insiders still believe that the USDA's August forecast data is too biased, and it is likely that the US cotton production and consumption will be lowered in September. Although the market hopes that cotton prices will continue to rise, considering the serious shortage of cotton demand and the excessive supply, cotton prices may still fluctuate between 61-65 cents before the USDA forecasts in September, and then the price rise will end. In August, cotton prices usually reach the highest point in history.

 

For cotton, its own fundamentals have not much support to speak of, even if the supply of cotton problems, the price rise is difficult to maintain. The real solution to the cotton problem is consumption, and the epidemic situation has brought down cotton consumption in Asia. The only good news may come from the external market and macro environment. America's adverse economic stimulus will continue to artificially push up stock and commodity prices. The macro level and the food crisis caused by the epidemic may be able to save the cotton prices that are difficult to extricate themselves from the epidemic situation.