US Cotton Exports Are Crucial And Cotton Prices Need To Wait For Breakout.

In May 13th, the market came down sharply after the USDA report of the day before the digest. The upcoming US cotton export weekly on Thursday is expected to be more intense. From now on, every weekly export report is crucial, because the end of US cotton inventory will reach a new high of 14 years, which is mainly due to the reduction in consumption of 6 million packages in April. If China can not continue to import large quantities of US cotton, this year, the US cotton will have huge inventory to carry forward to next year.

Traders who focus on the trend of Technical Graphics believe that the July contract is expected to recover 50% of the lost land, and the next target price is 61.10 cents. However, the July contract option expires in 30 days, even if the increase is estimated to be "further two steps". In May 13th, the July contract had fallen sharply under the dragging of the long positions and the Dow's decline.

In the last two days, the Dow Jones index has dropped nearly 1000 points, the US economy has been shaky, and the Dow and related financial markets are weakening because the Federal Reserve Chairman Powell has asked the government to continue to stimulate the economy. Now the Senate has already prepared $3 trillion in aid. From the recent strong appeals of all sides, the US economy is in danger of collapse. Under such a crisis, all commodities are down and cotton is no exception.

The market holds two views on this week's US cotton export weekly. One thinks that the export of US cotton will continue to increase, and China will still be the largest signatory country. But another voice thinks that the signing of the US cotton will be very low or even negative, because China may cancel the high price contract signed earlier, especially recently Trump threatened to impose tariffs on Chinese products again. The US futures brokers say there is no obvious fundamental support for the market. At this stage, we can only hope that there will be some demand from China to support cotton near 58 cents, but it is estimated that the actual data may not be good.

Analysts said that China's expansion of imports of cotton to the United States is not a real cotton consumption, but only to shift the US cotton stocks to China. The USDA forecasts that consumption will increase significantly next year, and the market need not be too serious. The recovery process of the world from epidemic situation will be very slow, and the recovery of cotton price has a long way to go.