Futures Market: ICE Cotton Futures Fell To A Low Point And Rebounded For Five Consecutive Days Last Week

As of the week of May 1 (Thursday), cotton futures on the Intercontinental Exchange (ICE) fell for five consecutive days, affected by the weather and market environment.

On May 2 (Friday), the cotton futures of the Intercontinental Exchange (ICE) rebounded from the over two-week low hit on the previous trading day, benefiting from the optimistic expectation of the trade agreement.

Although the trade conflict continues, there are signs that tariff reduction may be imminent. There are still many uncertainties in the market. How will cotton prices develop next?

Although the rain in West Texas is very necessary, this week has put pressure on the market to reverse the rally of last week.

On Friday, ICE July cotton contract rebounded and rose 2.75 cents or 4.2%, with the settlement price at 68.41 cents/pound,

Although the southwest region is in urgent need of water, the market interprets it as a signal of improving crop prospects, which aggravates the market's concern about the rising inventory of the global market that has oversupply.

The planting progress in Texas is slightly higher than the five-year average, and it is estimated that 21% of the crops have been sown. The sowing in southern Texas has made steady progress and has seen rainfall in the past week, which may cause a slight delay in sowing, but generally supports the growth and development of crops. West Texas, Oklahoma and Kansas also welcome precipitation, which is often accompanied by thunderstorms and bad weather, but it should help sowing and supplement soil moisture.

As many countries are on holiday all week, the trading volume is light, and the position volume is reduced by 6949 hands to 213513 hands.

The strong earnings of technology stocks last week boosted the stock market, but under the influence of mixed economic data and the uncertainty of continued trade conflict, market sentiment remained unstable.

The US economy shrank in the first quarter, which ran counter to the expectation of moderate growth, and the stock market fell accordingly. GDP fell 0.3% month on month, while it is expected to grow 0.2%, which is the first decline since 2022. The economic weakness is largely related to the uncertainty of trade conflicts, as American importers are eager to hoard foreign goods before the upcoming tariffs.

Crude oil prices fell this week as the US dollar strengthened. Concerns about increased production and oversupply are the main reasons for the decline in oil prices. Despite weak economic data, the US dollar rebounded on speculation that a new trade agreement might be in the pipeline.

The US added 177000 new jobs in April, exceeding expectations, indicating strong employment growth. The unemployment rate remained unchanged at 4.2%, although the employment growth in February and March was reduced.

The export sales report released by the US Department of Agriculture (USDA) on Thursday showed that in the week ended April 24, the net export sales of US cotton in the current year increased by 108400 bales, 4% higher than the previous week, and 21% lower than the average of the previous four weeks. In the next year, the net export sales of American cotton increased by 32900 bales. The export shipment of American cotton was 36600 bales, an increase of 25% over the previous week and 5% over the average of the previous four weeks, including 10800 bales exported to mainland China.

Future Outlook

Next week, trade policy and economic issues will remain the focus, and the Federal Reserve will make an interest rate decision on May 6-7.

The USDA report will release the monthly supply and demand report on May 12. The US Department of Agriculture will estimate the output based on the expected planting area report in March, which sets the planting area of US cotton at 9.867 million acres. In the southwest, Texas has a planting area of 5.527 million acres, Oklahoma 413000 acres and Kansas 140000 acres.

The weather is good in the near future. Although the planting area is reduced, it can still support the increase of crop production. However, as May is usually the wettest month, and summer weather is often difficult to predict, the planting area in 2025 is still uncertain.