Cotton prices fell to their lowest level in more than two weeks on Thursday, as the dollar continued to strengthen and concerns persisted about demand from top consumer China.
The dollar index, which measures the greenback against a basket of currencies, rose to its highest level since August 2020. A stronger dollar makes cotton more expensive for buyers who use other currencies.
China is the world’s largest consumer of cotton, and its demand has been a key driver of the global cotton market. However, recent data has shown that Chinese cotton imports have slowed in recent months.
The decline in cotton prices comes as the U.S. economy is showing signs of slowing down. On Thursday, the Labor Department reported that the number of Americans filing for unemployment benefits fell to the lowest level in 52 years. This suggests that the labor market is still strong, but it could also mean that economic growth is slowing.
The market will be closely watching weekly export sales data from the U.S. Department of Agriculture (USDA) due on Friday. The data is expected to show that cotton exports from the United States fell in the week ended September 2.
If the data shows that cotton exports are falling, it could put further downward pressure on prices.
Here are some other factors that could affect cotton prices in the near future:
- The direction of the dollar
- The pace of economic growth in China
- The weather in major cotton-producing countries
- The level of inventories