Market Observation: Tariffs May Promote The Export Of American Cotton July Contract Has The Opportunity To Rise

Special news: On April 22, ICE cotton futures turned up after the previous day's decline. The decline of the dollar index, the reduction of planting area and the uncertainty of weather conditions became potential supporting factors.

According to the latest American cotton production report, as of the end of last week, 11% of American new cotton planting had been completed, which was the same as the same period of previous years and significantly faster than the progress of the previous two weeks. In the next 8-14 days (April 28 May 4), the temperature in most cotton producing areas in the United States will be significantly higher, but the probability of rainfall in Texas will be higher, while the probability of rainfall in the delta and southeast areas will be very low.

On the same day, the US stock market and international oil prices rose sharply, and the cotton market followed the trend. At the same time, the decline of the US dollar and the reduction of the planting area also supported the market. The main July contract rebounded to above the 20th and 40th averages. In addition, the rebound of cotton prices on Tuesday was also related to the important progress in tariff negotiations between Vice President Vance of the United States and Indian Prime Minister Modi. It is reported that the two sides may reach a trade agreement within a 90 day tariff buffer period.

However, the tough confrontation between US President Trump and Federal Reserve Chairman Powell still makes the market outlook uncertain. Under the firm position of Federal Reserve Chairman Powell, President Trump recently called for interest rate reduction, which exacerbated lingering recession concerns. Traders expect that the Federal Reserve will cut interest rates at least three times this year. President of the Federal Reserve Bank of New York Dudley recently said that because the current trade policy is causing inflation, the actions of policymakers may be lower than expected. The International Monetary Fund estimates that global GDP will grow by 2.8% in 2025, lower than the 3.3% predicted in January. At the same time, it warned that the tariff policy of the United States may trigger a global trade war, so the prospects for global economic growth may continue to deteriorate.

The market is waiting for the weekly report of American cotton export this week. So far, the promised export volume of American cotton has reached 105% of the USDA forecast, higher than the average of 104% in the same period of the past five years. Recently, some countries in South Asia intend to increase their imports of American cotton in exchange for reducing tariffs. The later export demand of American cotton deserves attention. The second quarter will be the period of concentrated shipment of American cotton. If the contracted volume continues to improve, the fundamentals of the United States may be tightened. Analysts believe that the July contract has a chance to continue to rise by several cents.