Market Analysis: Demand Is Still The Core Problem Puzzling The Cotton Market

On December 24, after the sharp rise on Monday, the cotton market fell back on Christmas Eve. Traders took profits before the festival. The market was full of festive atmosphere and trading was very light.

Affected by the holiday, ICE futures market was closed for one day on the 25th, and the opening time was postponed to 19:30 p.m. Beijing time on the 26th. This week's US cotton export weekly report will be released one day later. The latest CFTC position report shows that during the continuous decline of cotton prices last week, the fund's net short position increased by about 7000 hands, and the short position increased to more than 29000 hands.

On Tuesday, the exchange rate of the US dollar against major currencies continued to remain strong. The Federal Reserve may maintain the current interest rate for a longer period than expected by the capital market. However, the strong growth of the US GDP in 2025 may offset this situation.

On Tuesday, crude oil prices rose. China, the world's largest oil importer, plans to issue special treasury bonds worth 3 trillion yuan next year, which brings some hope to the demand for crude oil. China is strengthening fiscal stimulus measures to boost its economy. In addition, the market's demand expectation for the United States in 2025 has also improved.

On the same day, ICE futures gave up some of the gains of the day before yesterday, and the continued strong dollar continued to suppress the impulse of cotton bulls. Traders waited for this week's US cotton export weekly report and the supply and demand forecast after the New Year to provide new guidance for the fundamentals.

Demand is still the core problem that puzzles the cotton market. Since the beginning of this year, American cotton exports have remained sluggish. With the arrival of the Christmas New Year and the Chinese Spring Festival, the market expects that American cotton exports will hardly improve significantly in the short term, and short-term support will be limited. The focus of the market is still how to implement the tariff policy after Trump takes office on January 20 next year.