Demand Recovery Difficult New York Cotton Futures Rebound May End

In April 13th, ICE futures failed to "resurrect" after Easter. The market reconsidered the impact of last week's USDA supply and demand forecast and the US cotton export data. ICE cotton futures contracts in May and July sharply reduced, and outside political and economic news had no support for cotton.

In the monthly supply and demand report released last Thursday, the US Department of agriculture (USDA) cut global consumption estimates to 110 million 580 thousand bales. US exports also dropped to 15 million bales, 1 million 500 thousand fewer than the previous estimate. Last week's US cotton export weekly showed that the net signed amount of US cotton was negative in the previous week, and that the failure of China's net contract only made China's net contract negative. The sharp rise in the number of cancellations in the US cotton contract has proved that the new crown virus has led to a decline in global consumption.

Rose Commodity Group research and Analysis Director Louis Rose said that the price trend seemed to be a delayed response to last week's supply and demand report and export sales report. He said that consumption of cotton and textiles is unlikely to be affected immediately by economic stimulus measures, and demand recovery may have to wait until the fourth quarter of this year or the first quarter of 2021. If financial investors finally take into account the fundamentals of the market, the current rebound of cotton futures in New York may soon end.

At present, there seems to be a glimmer of light at the end of this "dark tunnel". Judging from the data, the US government and health officials are cautiously convinced that the US may have reached the peak of the epidemic. This week, the US government will put forward the idea of restarting the US economy. But the Dow Jones index fell sharply on Monday, and most other commodity prices also went down, even though the oil production was reduced.