Trade Policy And Economic Environment Affect ICE Cotton Futures Price

As of April 25 (Friday) last week, the July contract of ICE cotton futures was 68.80 cents, drawing momentum from the external market. Although the trade conflict continues, the tariff problem may be eased. Will market momentum continue or will uncertainty dominate?

The cotton market found some footholds last week, and the July cotton ended at the highest level since the tariff announcement on April 2.

In the week shortened by the holiday, the cotton market opened weakly, but then rebounded strongly and closed at the highest level in more than three weeks. To a large extent, this momentum comes from the positive signals from the external market.

July cotton also broke through the key technical level and closed above the moving average of 50 and 100 days. Although the overall risk and weak fundamentals are still worrying, for the cotton market, the overall performance this week was steady.

The U.S. Department of Agriculture (USDA) announced in its weekly crop growth report that as of April 20, 2025, the planting rate of American cotton was 11%, compared with 5% the week before, 11% the same period last year, and 11% the five-year average.

The planting rate in Texas is consistent with the five-year average, to 16%. Cotton planting in southern Texas is progressing steadily, although some areas are replanting after earlier floods. Unplanted areas benefit from timely rainfall. West Texas, Oklahoma and Kansas also have precipitation on weekends and this week, which should support the seeding work.

Although the planting area may still be reduced compared with that of last year, the recent humid weather has improved the prospects for the next crop season.

The trading volume was moderate, and the number of open positions increased by 488 to 220462. The certified inventory is stable at 14478 packages.

Since January, the market has been accustomed to complex signals about the trade situation, but last week's comments boosted people's confidence that a trade agreement could be reached soon.

After a turbulent start, the stock market began to recover this week. On Monday, U.S. President Trump hinted that he might try to remove Federal Reserve Chairman Powell, but later clarified that he had no intention of doing so. The market responded positively to this clarification.

Investors saw the news as a sign that the economy might stabilize in the coming months, although the President of the United States has been criticizing Powell's position on interest rates.

The US dollar is still relatively weak, but the improvement of confidence around the trade situation provides some support. In contrast, the Brazilian real has rebounded recently, providing favorable conditions for US commodities.

However, continued market volatility and uncertainty have renewed concerns about potential recessions.

The export sales report released by the US Department of Agriculture (USDA) on Thursday showed that in the week ending April 17, the net export sales of US cotton in the current year increased by 104000 bales, 49% less than the previous week, and 22% less than the average of the previous four weeks, of which the net export sales to China decreased by 5300 tons. Next year, US cotton export sales increased by 38000 bales. 292200 bales of American cotton were shipped for export, 11% less than the previous week, and 22% less than the average of the previous four weeks, including 4400 bales shipped for export to China.

Trade policy and economic concerns will remain the focus next week. People's attention will turn to the release of key data, including March GDP, PCE price index (the preferred inflation indicator of the Federal Reserve) and the latest unemployment rate. Weekly US export sales data will also continue to receive attention.