Good Fundamentals And Downplay The Dominant Market

Last week, although the US dollar index weakened, the US intention area forecast decreased compared with the same period, and the US cotton exports maintained a relatively fast growth, ICE cotton futures were still under the control of the new crown virus epidemic situation. China's epidemic situation has been alleviated. The sharp increase in the number of cases in Korea has made cotton prices rise first and then fall, and the impact of epidemic situation on the global supply chain and demand is the most important problem in the current cotton market.

In the week ending February 13th, the US cotton contract volume was 235 thousand and 300 bales this year. Vietnam, Pakistan and Turkey were the main buyers. China signed a net cancellation amount and the US cotton shipment volume was 375 thousand and 500 packs. Up to now, the US cotton contract progress is 86%, and the average value in the past five years is 82%. In the week, China announced the elimination of tariffs on nearly 700 American goods, including the US cotton, which is part of the first phase of the Sino US agreement. Although China is not ready to purchase at the present stage, it is also a positive signal.

The US Department of agriculture's Agricultural Outlook Forum has made a preliminary prediction of global supply and demand in 2020/21. The global output is expected to grow by 2.3%, to 118 million 500 thousand packages, and the area of India, Brazil and the United States will be reduced, and the output of Australia and Pakistan will be restored. Global consumption is expected to grow by 1.7% to 121 million bales. As consumption exceeded production, global end inventories and inventories outside China declined. In 2020, the US cotton planting area was 12 million 500 thousand acres, less than NCC's estimated 12 million 800 thousand acres.

From a technical perspective, ICE futures closed at 70 cents last week, but they failed. If they fall below 68 cents, they may slip to 65 cents, and only break through 70 cents in the short term is likely to resume the upward trend.