In the week of November 7-11, the cotton market entered consolidation after a sharp rise. The USDA supply and demand forecast, the US cotton export report and the US CPI data were released successively. On the whole, the market sentiment tended to be positive, and ICE cotton futures maintained a firm trend in the shock. The contract in December was adjusted downward and recovered to close at 88.20 cents on Friday, up 1.27 cents from the previous week. The main contract in March closed at 86.33 cents, up 0.66 cents.
For the current rebound, the market should be cautious. After all, the economic recession is still continuing, and cotton demand is still in the process of declining. With the rise of futures prices, the spot market has not followed up. It is difficult to determine whether the current bear market is the end or the bear market rebound. However, judging from the situation last week, the overall mentality of the cotton market is optimistic. Although the USDA supply and demand forecast was short and the contract signing of American cotton was reduced, the cotton market was boosted by the decline of the US CPI, the decline of the US dollar and the rise of the US stock market.
Data shows that the US CPI in October rose 7.7% year on year, lower than 8.2% last month, and also lower than the market expectation. The core CPI was 6.3%, also lower than the market expectation of 6.6%. Under the dual pressure of declining CPI and increasing unemployment, the dollar index suffered a sell-off, which stimulated the Dow to rise 3.7%, and the S&P to rise 5.5%, the best weekly performance in recent two years. So far, American inflation has finally shown signs of peaking. Foreign analysts said that although some officials of the Federal Reserve hinted that interest rates would be further raised, some traders believed that the relationship between the Federal Reserve and inflation might have reached a serious turning point.
At the same time of positive changes on the macro level, China released 20 new prevention and control measures last week, which raised the expectation of cotton consumption. After a long period of decline, the market sentiment was released. As the futures market more reflects an expectation, although the actual consumption of cotton is still decreasing, the future expectation is improving. If the US inflation peak is confirmed later and the US dollar continues to fall, it will also create more favorable conditions for cotton price recovery at the macro level.
Against the background of the complicated situation in Russia and Ukraine, the continued spread of the COVID-19, and the high risk of global economic recession, the participating countries and most countries in the world hope to find the answer to how to achieve recovery at this summit. According to the news released by the Ministry of Foreign Affairs of China and the United States, the heads of state of China and the United States will hold a face-to-face meeting in Bali. This is the first face-to-face meeting between China and the United States dollar in nearly three years since the outbreak of the COVID-19. It is the first face-to-face meeting between the heads of state of the two countries since Biden took office. It is of self-evident significance to the global economy and the situation, as well as to the next trend of the cotton market.
Post time: Nov-21-2022