ICE Cotton Market Needs To Pay Attention To The Fact That The US Economy Is On The Verge Of Economic Recession

ICE cotton futures continued to rise in the session, and the market tried to continue to develop on the basis of last week. Some people worried that speculators would be randomly bearish, and the current cotton growth conditions were adverse. In addition, affected by the conflict in the Middle East over the weekend, the energy sector rose on the same day.

The latest position report shows that about 2400 managed funds sold last week, and the net short position was 51845, just below the historical peak of 52024.

Recently, several cotton producing areas in the United States, especially Texas, have experienced a high temperature of 40 degrees. In the next 6-10 days, the temperature in Texas will be normal, but the temperature in southeast cotton area will be higher. In terms of rainfall, the probability of rainfall in Texas is higher than the normal value, and the rainfall in Southeast China is slightly more.

New conflicts emerged in the Middle East over the weekend. Hezbollah in Lebanon fired a series of rockets and drones at Israel. The attack was in retaliation for the assassination of a senior Hezbollah commander in Beirut last month. Crude oil prices rose sharply on Monday morning.

On Monday, affected by the strengthening of the US dollar and concerns about cotton demand, the cotton market closed slightly lower. Although the Federal Reserve said it might start to cut interest rates next month, the geopolitical conflict in the Middle East over the weekend raised concerns, providing support for the dollar.

At present, traders will evaluate Monday's crop growth report and Thursday's US cotton export data to find clues for the price trend. According to the latest report, the excellent rate of American cotton fell from 43% to 40% last week, and the poor seedling rate in Texas rose, which may provide support for cotton prices.

Some traders said that the US economy was on the verge of recession. Some analysts pointed out that the deteriorating U.S. labor market was a key factor in the economic downturn. Recently, the unemployment rate announced by the US Department of Labor was 4.3%, the highest level since October 2021, while the US manufacturing activity fell to an eight month low.

On last Friday, ICE closed above 70 cents. With the rebound of cotton prices in the past week, the situation of short-term and medium-term continuous decline reversed, and the mood of speculation and short selling began to change. From now on, the market may really start to form a bottom, with the upper resistance at 73 cents, followed by 76 cents.