ICE cotton faces bearish trend amid slow demand, weaker factors

Yesterday, the ICE cotton December contract went down to settle at 70.62 cents per pound (0.453 kg). It had hit a one-month low of 70.06 cents. The March 2025 contract was lower by 11 points, reaching 72.51 cents.

According to trade analysts, dollar index gained on Monday amid thin trade. It settled above 104 levels. President Joe Biden’s withdrawl from re-election campaign leg to higher volatility in currency market. Stronger dollar made cotton buying expensive for foreign buyers. Crude oil price continued to fell on second day in a row. It came down to a low level of more than one month. The investors focused on rising inventories and weakening demand. Lower oil prices made polyester, a cotton alternative, cheaper.

The dollar index gained on Monday amid thin trading, settling above the 104 level. President Joe Biden's withdrawal from the re-election campaign led to increased volatility in the currency market. A stronger dollar made cotton more expensive for foreign buyers. Meanwhile, crude oil prices continued their decline for the second consecutive day, reaching a one-month low. Investors focused on rising inventories and weakening demand, which led to lower oil prices. This decrease made polyester, a cotton alternative, cheaper, according to trade analysts.

The trading volume for cotton futures was relatively light on Monday, with 21,110 contracts, compared to 22,504 contracts on Friday. Open interest has been rising for 13 consecutive sessions, adding a total of 11,939 contracts since July 1, when it was at a 2.5-month low of 208,683 contracts. As of today, open interest stands at 220,622 contracts, up by 768 contracts from Friday.

ICE data showed deliverable No. 2 cotton futures contract inventory was 40,419 bales as of July 19, down from 41,122 bales the previous trading day. The US Commodity Futures Trading Commission (CFTC) reported that cotton speculators reduced their net short positions by 631 lots to 44,491 in the week ended July 16.

A report released yesterday indicated a significant improvement in cotton crop conditions. The USDA's crop growth report indicated that 53 per cent of US cotton was rated good to excellent as of July 21, compared to 45 per cent the previous week and 46 per cent in the same period last year.

On Tuesday, ICE cotton for December 2024 was traded at 70.74 cents per pound, up 0.12 cent. Cash cotton traded at 65.13 cents (up 0.15 cents), the October contract at 70.64 cents (up 0.51 cents), the March 2025 contract at 72.64 cents per pound (up 0.13 cents), the May 2025 contract at 74.02 cents (up 0.12 cents), and the July 2025 contract at 74.89 cents (up 0.10 cents). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)