In the first week of the New Year (January 2-5), the international cotton market failed to achieve a good start, the US dollar index rebounded strongly and continued to run at the high level after the rebound, the US stock market fell from the previous high, the influence of the external market on the cotton market was bearish, and cotton demand continued to suppress the impulse of cotton prices. ICE futures gave up some of the pre-holiday gains on the first trading day after the holiday, and then fluctuated downward, and the main March contract finally barely closed above 80 cents, down 0.81 cents for the week.

In the New Year, the important problems of last year, such as inflation and high production costs, and the continuous reduction of demand, are still continuing. Although it seems to be getting closer and closer to the Federal Reserve to start cutting interest rates, the market’s expectations for policy should not be excessive, last week the US Department of Labor released the US non-farm employment data in December again exceeded market expectations, and the intermittent inflation made the financial market’s mood fluctuated frequently. Even if the macroeconomic environment gradually improves this year, it will take longer for cotton demand to recover. According to the latest survey of the International Textile Federation, since the second half of last year, all links of the global textile industry chain have entered a state of low orders, the inventory of brands and retailers is still high, it is expected that it will take several months to reach a new balance, and the concern about weak demand is further aggravated than before.

Last week, American Cotton Farmer magazine published the latest survey, the results show that in 2024, the United States cotton planting area is expected to decrease 0.5% year on year, and futures prices below 80 cents are not attractive to cotton farmers. However, it is unlikely that the extreme drought of the past two years will occur again in the cotton producing region of the United States this year, and under the condition that the abandonment rate and the yield per unit area return to normal, the United States cotton production is expected to increase significantly. Considering that Brazilian cotton and Australian cotton have seized the market share of US cotton in the past two years, the import demand for US cotton has been depressed for a long time, and US cotton exports have been difficult to revive the past, this trend will suppress cotton prices for a long time.

Overall, the running range of cotton prices this year will not change significantly, last year’s extreme weather, cotton prices only rose more than 10 cents, and from the low point of the whole year, if the weather this year tends to be normal, the large probability of countries is the rhythm of increased production, cotton prices stable weak operation probability is larger, high and low are expected to be similar to last year. The seasonal rise in cotton prices will be short-lived if demand continues to fail to keep up.

Source: China Cotton Network