Market Trends: Pay Attention To American Cotton Market Prices Continue To Struggle

After the decline the day before yesterday, the cotton market continued to struggle. Traders seemed to ignore the advantages of the USDA report and began to re-examine the report. In addition, traders focused on the release of US CPI data and other reports this week.

According to the latest data from the US Department of Labor, the US CPI growth in July was in line with expectations, with goods and services up 0.2% and the annual growth of 2.9%. Economists had predicted that they would rise 0.2% and 3% respectively. The annual CPI increase in July was also the lowest since March 2021.

On Wednesday, despite the favorable USDA supply and demand forecast, cotton futures fell for the second day in a row and were indifferent to the positive trend of the peripheral markets. Traders waited for the release of US retail data and US cotton export report. The market expects US retail sales to grow 0.1%, down from 0.4% in June. In terms of US cotton exports, the contracted volume of US cotton last week was -949600 bales, with China having the largest number of cancellations.

In terms of weather, the rainfall in western Texas is expected to be scattered and sporadic. Many dryland fields still need sufficient rainfall. In the coming week, the delta and southeast areas also need rainfall. At this time of year, cotton needs continuous and timely rainfall to ensure that the cotton peach is fully mature.

On Wednesday, international oil prices fell due to the more than expected increase in inventories. In addition, the White House of the United States said that if the Gaza ceasefire agreement was reached, Iran might not attack Israel, which also triggered some selling. It is reported that a new round of ceasefire talks is expected to take place on Thursday, but Hamas publicly said that it would not participate.

Analysts said that despite the sharp decline in American cotton production, the prospect of American cotton production has not changed, and the core problem is the poor demand situation. This year, the demand of major importing countries, especially China and Bangladesh, has decreased. Even if American cotton production is reduced, the demand next year will not be optimistic, and the recovery of the market is expected to be very slow. In addition, the recent turmoil in Bangladesh has also cast a shadow on cotton consumption and US cotton exports.