Market Analysis: ICE Cotton Fell, Pay Attention To This Week'S Supply And Demand Report

Cotton futures declined last week (as of July 3), and the trading time was shortened due to the holiday.

Last week's planting area report was unexpectedly bearish, which continued to put pressure on the market. ICE12 month cotton contract fell 222 points, and the settlement price was 72.36 cents/pound.

Daily turnover was the lowest in recent months. Positions decreased by 2390 to 210048.

The quantity of cotton meeting the delivery conditions decreased significantly compared with the previous week. A total of 5244 packages were cancelled certification, and the certification inventory was 53791 packages.

The U.S. Department of Agriculture (USDA) announced in the weekly crop growth report that the excellent rate of American cotton was 50% by the week of June 30, 2024, 56% the week before, and 48% the same period last year. The boll setting rate of American cotton was 11%, 8% the previous week, 9% the same period last year, and the five-year average was 9%. The budding rate of American cotton was 43%, 30% the previous week, 38% the same period last year, and 38% the five-year average. The excellent rate of cotton in Texas is 44%, Oklahoma 69% and Kansas 56%.

US Wall Street stocks closed higher on Friday, with the Nasdaq index and the S&P 500 index, which are heavy technology stocks, both hitting record highs. Data shows that the US labor market is weakening, boosting expectations of interest rate cuts as early as September.

Data from the US Department of Labor showed that the US employment growth slowed slightly in June, the unemployment rate rose to the highest level in more than 2.5 years, and wage growth slowed down. Investors expect that when the Federal Reserve Board (Federal Reserve/FED) meets later this month, these data may trigger more active interest rate cut discussions. According to the FedWatch tool of CME, the probability of the Federal Reserve easing policy in September jumped to 79% from 66% before the data was released.

The export sales report released by the US Department of Agriculture (USDA) on Friday showed that in the week ended June 27, the net export sales of US cotton in the current year increased by 115400 bales, 27% higher than the previous week, but 23% lower than the average of the previous four weeks, including 63600 bales of net export sales to China. In the next year, the net export sales of American cotton increased by 56900 bales, of which the net export sales to China increased by 30800 bales. 175800 bales of American cotton were shipped for export, an increase of 25% over the previous week, and an increase of 3% over the average of the previous four weeks, including 62200 bales shipped for export to China. In the current year, 131300 bales of American cotton were newly sold, and in the next year, 56900 bales of cotton were newly sold.

The USDA's monthly supply and demand report will be released on Friday, July 12. The higher than expected planting area data indicates that the crop output in the United States will exceed 17 million bales.

Traders are looking at Hurricane Beryl and its potential impact on crops in southern Texas. Although rainfall may be beneficial to some crops, strong storms may bring destructive hail, floods and strong winds.