Multiple factors converge to end ICE cotton rally

Yesterday, ICE cotton March 2025 contract settled at 71.68 cents per pound (0.453 kg), down by 0.04 cents. The contract had hit a highest level of 71.99 cents since November 12 on Monday.

Crude oil prices declined for the second day, reducing the cost of polyester—a cotton substitute—and increasing competition for cotton in the global market. However, dollar index was slightly lower which provided support and capped fall in US cotton.

The trading volume on November 26 was 33,891 contracts, compared to 49,810 contracts cleared on November 25. As of November 25, the deliverable No. 2 cotton contract inventory remained unchanged at 13,274 bales.

Market analysts said that tariff news was discouraging traders across all agricultural markets, including cotton, leading to cautious note by the buyers. Trading activities were subdued as market participants refrained from significant moves ahead of the Thanksgiving week in the US.

Brazilian farmers in newly expanded agricultural areas are planting more cotton and less corn, further strengthening the South American country’s position as the world’s largest cotton exporter, surpassing the US. It raised prospects for higher production in Brazil.

The market remained sensitive to trade policies, oil price movements, and global supply dynamics, with Brazil’s cotton expansion posing a long-term competitive challenge to the US.

At present, ICE cotton for March 2025 was traded at 71.59 cents per pound (down 0.09 cent). Cash cotton was settled at 67.68 cents (down 0.04 cent), the December 2024 contract at 73.37 cents per pound (up 0.17 cent), the May 2025 contract at 72.71 cents (down 0.08 cents), the July 2025 contract at 73.90 cents (up 0.13 cent) and the October 2025 contract at 72.93 cents (up 0.60 cents). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)