Insight Into The Economy: China'S Imposition Of Tariffs On American Products Cotton Is Not On The List

Last week, the contracted volume of American cotton decreased, but the previous week was the annual high point, so the number is reasonable. Traders paid close attention to this week's US cotton export weekly report. In the past few weeks, the shipment volume of American cotton exports has declined, but American cotton exports are still flowing to many countries. Nevertheless, the speed of signing contracts for American cotton exports still lags behind the same period last year. For the US nonfarm employment data, the market is expected to add 176000 jobs.

The US dollar fell slightly on Wednesday as China announced that it would impose tariffs on some US products. These tariffs are in response to the US's earlier imposition of 10% tariffs on Chinese goods, but specific products are limited, and products such as soybeans and cotton are not on the list. On the same day, international oil prices fell due to the unexpected increase in US inventories. In addition, concerns about the Sino US trade war may also threaten crude oil demand. However, US President Trump announced on Wednesday that he would exert maximum pressure on Iran to restrict its nuclear program, with the aim of reducing Iran's crude oil exports to zero.

The March contract will enter into delivery on February 21, and all positions must be settled before that. As of Wednesday, there are still more than 120000 contract positions. On the same day, as the contract delivery in March approached, the pressure on the cotton market to transfer positions rose. At the same time, speculative short positions continued to depress the market when the general trend was downward. The decline of oil prices and grains also dragged down cotton prices. The next focus of the market is the intended cotton planting area of NCC in the middle of this month (annual meeting on February 14-16).

In terms of weather, from the second half of winter to early spring this year, rainfall is required in the desert areas of the southwestern United States, southern California and southern/western Texas to ensure sufficient soil moisture during spring sowing. In addition, some areas in the southeast of the United States are also relatively dry, and also need rainfall. There is more rainfall in the delta area of the United States and some inland areas in the southeast, and there may be rainfall in western Texas next week.

Some news reports said that Brazilian farmers had to avoid rain to collect soybean crops. This news implies that corn and cotton crops will suffer from delayed planting. It is reported that only 35% of Brazil's cotton crops have been sown, while 75% should be sown normally. In addition, the non irrigated summer grain and cotton in eastern Australia are under the pressure of limited rainfall and abnormal hot weather.

Technically, short sellers of cotton futures continue to firmly control the short-term trend. The decline in the K-line chart has lasted for four and a half months. The goal of long sellers is to break the settlement price of 69 cents, while the goal of short sellers is to break the 64 dollar branch support. Prior to this, the first target price of the long and short sides was 67 cents and 65.50 cents respectively. On the whole, China is cautious in imposing tariffs on the United States and Canada. Cotton and agricultural products are not included in the list, which helps stabilize market psychology.