ICE cotton recovers after continued fall; market notices triggers

19 Jun '24

2 min read

ICE cotton recovers after continued fall; market notices triggers

Pic: Adobe Stock

Insights

ICE cotton prices rebounded from a prolonged decline due to technical short covering, a weakened dollar index, and a surge in crude oil prices.
The December contract settled at 72.76 cents per pound, up by 99 points.
The market also noted potential weather issues in Texas.
Trading volume was slightly down at 49,112 contracts, with no trading on Wednesday.

ICE cotton prices took a respite from their free fall yesterday, experiencing a notable recovery. This rebound was driven by technical short covering, a weakened dollar index, and a surge in crude oil prices. Additionally, the market observed potential weather concerns in certain areas of the Texas region, although these issues remain unconfirmed. This recovery comes after several consecutive trading sessions of decline.

According to trade analysts, the ICE cotton December contract settled at 72.76 cents per pound (0.453 kg), up by 99 points, as rolling over from July to December is happening rapidly before the first notice day.

The dollar index settled below the 105 level after discussions on an interest rate cut. Weakness in the dollar provided foreign buyers relief in US cotton purchasing. The rally in crude oil also supported the cotton value chain, as it made polyester more expensive for the textile industry.

Yesterday, the trading volume of ICE cotton was 49,112 contracts, slightly down due to a holiday in the market today. Additionally, 62,781 contracts of cotton were cleared. Total open interest began today at 216,807 contracts, down 1,271 contracts from yesterday. Certified stocks began today at 137,063 bales, down 920 bales.

Temperatures are rising again in a few pockets of Texas, areas which need rain for a good cotton crop in the US. If timely rains are not received in the region, it may result in weaker standing crops and potential abandonments.

There will be no trading in ICE cotton on Wednesday.

Fibre2Fashion News Desk (KUL)

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