ICE Cotton: The Decline Of Cotton Planting Area In The Northern Hemisphere Is Expected To Provide Support For The Market

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On January 8, ICE cotton futures fell after opening. The peripheral financial markets were nervous. Traders were worried about the US inflation data this week, fearing that inflation exceeding expectations might trigger the Federal Reserve to take action again.

According to the latest CFTC position report, as of the week before last Tuesday, the fund had continued to close its positions, with 541 speculators selling and 4388 net short positions. This week, the US Department of Agriculture will release the supply and demand forecast. At present, the market is not expected to change significantly.

Recently, Saudi Arabia sharply lowered the price of Arab standard grade light crude oil to fight against the increase in supply and competition from OPEC member countries, and its price has fallen to a low point in nearly 27 months.

After the early decline, ICE futures recovered their losses in the late afternoon, and the overall volume ended slightly higher. Although traders worried that the policy of the Federal Reserve to cut interest rates might change, the expectation of the decline of cotton planting area in the northern hemisphere this year provided support for the market.

This week's US CPI and PPI data will have an impact on the decision of the Federal Reserve's interest meeting at the end of this month. At present, the market expects the US CPI in December to rise 0.2% month on month, 0.3% last month, 3.8% year-on-year, and 4.01% last month. PPI is expected to rise 0.1%, unchanged last month, up 1.3% year on year and 0.9% last month.

On the same day, the dollar index fell, and traders continued to digest last week's negative employment data in the United States, while preparing for this week's CPI and PPI data. Judging from the employment data, the US employment market is still not strong enough.

At the beginning of the new year, the change in the expectation of the Federal Reserve to cut interest rates will continue to interfere with the financial market. Cotton is to a large extent a follower of the external market, and the pace of recovery will still be bumpy. Back to the fundamentals, the decline of American cotton planting intention this year has gradually come into view, which has a certain supporting effect on the market. However, in the case of stagnant demand, it is still very difficult for prices to recover.