Cotton Price Waiting For Sentencing Next Year Area Geometry?

Although Tuesday's USDA monthly report is positive, Wednesday's cotton market is still nervous and prices are low. According to the monthly report, the US cotton output has been reduced by 600 thousand bales to 20 million 210 thousand bales this year, and the final inventory has been reduced to 5 million 500 thousand bales. At the same time, the global final inventory was also reduced by 500 thousand packages, to 80 million 320 thousand bales.

Nevertheless, the market is worried about US tariffs on China this weekend. According to the original plan, the United States will impose a 15% tariff on the remaining 160 billion dollars of Chinese goods. At present, the negotiations between the two sides are becoming hotter and hotter. Once the tariff is implemented, the hope of reaching a trade agreement this year will be completely lost.

In December 11th, ICE futures narrowed all day, traders prepared for Thursday's US cotton export weekly and Sunday's tariff limit, and the day before yesterday's USDA monthly report provided support for the market. It should be noted that although the US and global output and final inventory have dropped sharply, global consumption has also been sharply reduced, indicating that demand for cotton is still shrinking. The hope of the market is still in Trump's final decision.

On Wednesday, the Fed's interest rate meeting decided to maintain the US dollar benchmark interest rate unchanged, and the US dollar index declined slightly. The strong US dollar has been a bad influence on cotton for a long time.

A few weeks from 2020, the March contract has fallen by 8.35 cents a year, although this does not mean what the price will be next year, but the price has fallen by 20 cents compared with the same period last year, which is unfavorable for next year's cotton planting intentions. Peanut, soybean and grain will compete with cotton for the area unless ICE futures rise sharply.