Global Perspective: Cotton Market Is Not Easy To Rise In The Near Future Due To Tariff Impact

With the recovery of the Dow and related markets, the cotton market followed suit. Of course, the fundamentals of the cotton market itself have also improved, but it is often overshadowed by the impact of the financial and capital markets. Early Wednesday morning, cotton contracts for the new year and this year all rose by more than 100 points.

New York cotton season closed higher at 69.17 cents in July contract on Thursday. The new issue of American cotton export weekly report was released on Thursday. Last week, the total number of American cotton contracts reached 268000 bales, an increase of 76% month on month, and the shipment volume reached 328000 bales, a decrease of 13%. This year's cumulative committed sales reached 105% of the USDA forecast, higher than the average of 104% in the same period of the past five years.

International oil prices fell under pressure due to the possible weakening of US sanctions against Iran. It is reported that the recent nuclear negotiations between the United States and Iran have been quite constructive, and the relationship between President Trump and Federal Reserve Chairman Powell has also eased. In addition, Trump also said that he would significantly reduce tariffs on China, which contributed to the decline of oil prices.

On the same day, the capital market rebounded sharply when the Trump government improved its relations with the Federal Reserve and China. The cotton market rose sharply under the stimulus of the soaring US stocks. The main contract in July filled the gap on April 2, and the contract in December was close to 70 cents. However, the above factors led to the decline and rise of the dollar index, and the cotton market was limited by the fall of oil prices.

The World Weather Company predicts that there will be limited rainfall in southern Texas and coastal areas, and there will be timely rainfall in western Texas in the middle and later this week, and soil moisture is expected to improve. The rainfall in the delta is expected to last for a period of time, affecting the seeding progress of new cotton. The seeding weather in southeast China, California and southwest desert areas is the best.

After this sharp rise, the cotton daily K line chart began to develop upward. The resistance level above the contract in July was the highest intraday price of 69.60 cents, followed by the 70 cents mark. However, the market needs to be clear that it is impossible to solve the tariff problem overnight, and the actual situation is far from the outside imagination. In the short term, compared with tariff reduction, whether American cotton exports can continue to grow is a more practical and reliable hope.