The Impact Of The Sino US Federal Reserve Meeting On The Cotton Market Is Sensitive

In the past week, the foreign cotton price has experienced a deep correction after a sharp rise, and the domestic cotton price fluctuation is relatively small. The difference between domestic and foreign cotton prices is inverted and remains at a high level.

On March 8, the average price of national cotton price B index representing the market price of standard lint in the mainland was 17144 yuan/ton, up 31 yuan/ton or 0.2% from the previous week; The international cotton index (M), which represents the average landed price of imported cotton at China's main port, is 105.44 cents/pound, down 1.80 cents/pound or 1.7% from the previous week. When converted into RMB import cost, 18176 yuan/ton (calculated at 1% tariff, excluding port sundries and freight), it is 341 yuan/ton lower than the previous week, down 1.8%. The difference between internal and external cotton prices is 1032 yuan/ton, which is 372 yuan/ton smaller than the previous week; The average settlement price of the main contract of ICE cotton futures was 95.73 cents/pound, down 2.23 cents/pound from the previous week, or 2.3%.

The average settlement price of the main contract of Zhengzhou cotton futures was 16052 yuan/ton, down 180 yuan/ton from the previous week, or 1.1%; The price of conventional outer yarn is 24425 yuan/ton; Compared with domestic yarn, it is 962 yuan/ton higher, and the price of polyester staple fiber is 46 yuan/ton lower to 7301 yuan/ton.

Future prospects:

This year, the production of American cotton was significantly reduced and the export progress was significantly increased year on year, which triggered the market speculation about the shortage of American cotton stocks. However, with the further rapid rise of American cotton prices in the near future, the wait-and-see sentiment in the market has become stronger. On March 7 and 8, ICE cotton futures prices staged a "roller coaster" market, which may further aggravate the wait-and-see mentality of the market.

From the perspective of the macroeconomic situation, the Federal Reserve's interest rate cut is expected to increase, but the uncertainty is still large. Geopolitical conflicts and the Red Sea crisis continue to interfere with the economic recovery and commodity supply chain. The International Monetary Fund's expectation of a slowdown in global economic growth in 2024 has not changed.

From the perspective of cotton supply and demand, the supply and demand of cotton in the international market in 2023/24 are basically balanced. At this stage, major textile producing countries have bought a lot of cotton, and China's domestic production and demand gap has been effectively alleviated under the influence of market regulation policies.

It is expected that cotton prices at home and abroad will maintain consolidation in the near future. In the next step, we need to pay close attention to the global cotton production and demand data of the US Department of Agriculture, the US Federal Reserve's interest meeting, the US cotton planting intention area report, and the survey report on China's cotton planting intention area, among which the results of the US Federal Reserve's interest meeting may be the most sensitive to the impact on the market.