Can Cotton Prices Continue To Rise?

On July 13, although Texas weather still supported the market, the cotton market opened lower. Forecasts for the next 6-10 days and 8-14 days still show that most of the southwestern United States will remain dry and hot.

Due to the rapid rise in cotton prices before, the market has been overbought. Data show that funds bought 12000 hands net last week, and the long positions increased to 21520 lots. Non commercial and unreported traders also bought a lot.

On the same day, the market began to respond to USDA monthly report's downward forecast of US cotton exports. According to the report, the U.S. cotton export volume in 2020 / 21 will be reduced from 16 million bales to 15 million bales, because the epidemic situation affects cotton export demand. Overall, USDA's supply and demand forecast has a supportive effect on the market, but it is not good. After all, global supply will still exceed demand in the next year. Even if us end of term inventory declines, the inventory consumption ratio is still the second highest since 2007 / 08.

July 13, after a week of strong rise, the cotton market fell back, and the technical side also entered a correction. Traders are focused on this week's OPEC talks. This week's decision to cut 7 million barrels a day of crude oil production to boost oil prices will also have an impact on the cotton market. In the short term, the situation of US cotton exports in the next few weeks is crucial to the market trend. If the Sino US agreement continues to be implemented, cotton prices will have the potential to continue to rise.