Market Turbulence: ICE US Cotton Closed Lower, Depressing Cotton Prices

ICE American Cotton closed lower on Friday. Although the weekly sales report data of American Cotton was strong, the rebound of the US dollar depressed cotton prices. The US dollar has a great impact on the trend of American cotton, which is why we should pay close attention to the trend of the US dollar. Suppose the US dollar appreciates → the import cost of non American countries rises → the export competitiveness of American cotton declines (especially compared with Brazilian cotton) → speculative funds sell futures contracts, and the price of American cotton declines.

At present, the market is worried about the Federal Reserve's "interest rate reduction delay". The dollar may maintain high volatility in the short term, and the pressure above the US cotton is difficult to dissipate.

If the FOMC meeting in March releases the "hawkish signal", American cotton may fall to 65 cents/pound support.

The expected decrease of American cotton planting area is also affecting the trend of American cotton. NCC survey verifies that the American cotton planting area will decrease by 14.5% to 9.6 million acres in 2025, of which the abandoned farming rate in Texas may rise to 45% (drought+low cotton price). If the planting area of American cotton decreases by more than 15% for two consecutive years, it will lay hidden dangers for the future cotton price boom.

At present, American Cotton is in the game stage of "weak reality" and "strong expectation". It is suggested to operate with shock thinking, focusing on tracking the turning signal of the US dollar index and the recovery rhythm of Chinese demand.