ICE cotton recovers on short covering & rising crude oil

26 Jul '24

2 min read

ICE cotton recovers on short covering & rising crude oil

Pic: Adobe Stock

Insights

ICE cotton rebounded, supported by rising crude oil prices and short covering at lower prices.
The December contract closed at 68.90 cents per pound, up 0.24 cents.
US export sales were mixed, with slight improvement for the coming season but cancellations for the current season.
Traders await improved demand and focus on global harvesting conditions.

ICE cotton recovered after a decline over the last six sessions. The market noted a respite due to support from rising crude oil prices and a short covering rally at lower prices. US export sales for the coming season were slightly better, though there were some cancellations for the current season. Overall, the market still lacked strong fundamentals.

Yesterday, the ICE cotton December contract settled with mild gains, closing at 68.90 cents per pound (0.453 kg), up 0.24 cents. It had lost 343 points during the last six sessions.

The dollar index was slightly lower yesterday, providing important support to falling US cotton prices. The recovery in crude oil prices also supported cotton as it made the polyester value chain costlier, according to trade analysts.

Yesterday's trading volume was quite low at 23,724 contracts, significantly lower than the previous day's volume of 44,460 contracts.

The USDA Weekly Export Report showed overall positive export sales from the US. Weather conditions have been good, but severe weather is expected in West Texas over the next 10 days, which could lead to drought concerns if it persists for about three weeks.

Traders are waiting for an improvement in demand, which is expected at lower levels. The major focus is on weather and harvesting conditions around the world as the harvest will pick up in the coming months.

On Friday, ICE cotton for December 2024 traded at 68.30 cents per pound, down 0.30 cents. Cash cotton traded at 62.11 cents (up 0.20 cents), the October contract at 67.21 cents (up 0.20 cents), the March 2025 contract at 70.40 cents per pound (down 0.26 cents), the May 2025 contract at 71.79 cents (down 0.23 cents), and the July 2025 contract at 72.88 cents (down 0.22 cents). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)

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