Market Observation: The Overall Turnover Was Low, And The Cotton Price Once Fell

In February this year, about 45% of China's cotton imports came from Brazil and 35% from the United States. Since the market price reached 90 cents/pound a few weeks ago, the future and present prices of most grades of crops have diverged. The daily trading volume of this week was generally low. The total positions decreased by 4069 to 274254. The latest report of registered inventory is 41756 packages. The increase in inventory may be one reason for the price decline.

At the FOMC meeting in March, the Federal Reserve decided to keep the interest rate range at 5.25-5.5% and said that it might cut interest rates three times this year. The Bank of England also kept interest rates stable this week, maintaining them at a 16 year high of 5.25%. The three major stock indexes of the United States rebounded to record highs and responded positively to the prospect of interest rates of the Federal Reserve. The dollar rose as weekly jobless claims fell and home sales were higher than expected, according to reports.

In the week ended March 14, the United States exported 397300 bales of upland cotton, an annual high in the market. During the reporting period, the export sales of cotton in the current year increased by 92600 bales. Although this year's sales progress is ahead of schedule, historically, sales are still slow. The quantity of cotton exported this week exceeded the estimated average speed of 100000 bales required to reach 12.3 million bales. The sales of new works were 40500 packages, lower than the average level of the same period of the year and down compared with last week. 2100 bales of Pima cotton were sold and 1200 bales were shipped this week.

Trading days will decrease next week due to Good Friday. The weekly export sales report will continue to receive attention as usual to understand whether the current sales and shipment speed is sustainable.

Cotton planting in southern Texas continues under most favorable conditions. Some areas in West Texas, Oklahoma and Kansas welcomed a small amount of precipitation, but on the whole, it was dry and the temperature was higher than the average.

Next week, the U.S. Department of Agriculture will release a planting intention report on Thursday, March 28. The cotton planting area is expected to be higher than last year's 10.23 million acres. This report is critical because its estimates will be used to forecast the output of the May and June supply and demand reports.