According to trade analysts, the US cotton July contract touched a new three-and-a-half-year low during the session before the first notice day. The December contract touched a new yearly low of 70.01 cents but saw some recovery in the late session, settling at 71.77 cents per pound (0.453 kg) on Monday.

The dollar index was stronger again yesterday, maintaining a level of 105 and settling with gains, touching a new monthly high. The higher dollar index put extra pressure on cotton prices. Crude oil was also on the upside, supporting cotton prices and leading to some recovery.

Yesterday, US cotton trading volume was good. The final volume was 62,781 contracts, with 44,574 contracts cleared on Friday. Certified stocks began at 137,983 bales, down 264 bales, with 420 new certifications and 684 decertifications. Currently, 2,151 bales are awaiting review. Last week, there were 7,325 new certifications and 1,809 decertifications, leading to a net increase of 5,516 bales.

Weather conditions remain favourable across the whole US cotton belt. Beneficial rains were seen in Texas, Oklahoma, and Kansas over the weekend, along with rain in the forecast, leading to pressure on prices.

Currently, there is poor demand for US cotton and stiff competition from Brazil and Australia. Mills are stepping to the sidelines despite price drops due to market weakness. Speculators have been strong in the last two weeks as the market has seen unprecedented selling pressure. The market still needs to wait for a shift in position.

On Tuesday, ICE cotton July 2024 traded 0.31 cents lower at 69.63 cents per pound. Cash cotton traded at 66.98 cents (down 1.37 cents), the October (new crop) contract at 72.98 cents (down 1.37 cents), the December 2024 contract at 71.36 cents (down 0.41 cents), the March 2025 contract at 72.69 cents per pound (down 0.36 cents), and the May 2025 contract at 74.04 cents (down 0.34 cents). Few contracts were seen at the level of the last closing as there was trading noted today.

Fibre2Fashion News Desk (KUL)