ICE cotton falls further amid stronger dollar, improved crop condition

29 Aug '24

3 min read

ICE cotton falls further amid stronger dollar, improved crop condition

Pic: Adobe Stock

Insights

ICE cotton prices continued to decline for the third consecutive day due to gains in the dollar index, favourable weather in US cotton-growing areas, and weaker crude oil prices.
The December contract settled at 68.55 cents per pound, down over two per cent.
Market awaits USDA export sales report to better understand demand and supply trends.

ICE cotton continued to decline for the third day in a row. Significant gains in the dollar index and favourable weather conditions in US cotton-growing areas pulled down ICE cotton prices. Weaker crude oil also contributed to the decline in US cotton prices. Concerns about slow demand and trade issues between the US and China were also negatively affecting sentiments in the cotton trade. Traders are waiting for cues from the US cotton export sales report, which is due today.

Yesterday, the ICE cotton December contract settled at 68.55 cents per pound (0.453 kg), with a fall of more than two per cent. It reached a low of 68.29 cents during the trading session.

The dollar index gained 0.5 per cent yesterday as it rebounded due to month-end buying and technical factors. ICE cotton had recently witnessed a rally, mainly due to a fall in the dollar index, which had hit its lowest level in a year. Now, the stronger dollar has led to a slowdown in ICE cotton.

Crude oil prices eased due to a lower-than-expected draw in US crude oil inventories and concerns over Chinese demand. This also made polyester, an alternative man-made fibre, cheaper, which added pressure on ICE cotton.

The trading volume for the day was 30,994 contracts, with 23,144 contracts cleared the previous day. Open interest in cotton futures decreased by 1,384 contracts, bringing the total to 227,269 contracts. According to the latest data from ICE, the number of cotton futures contract stocks dropped to 266 bales, a significant decrease from 9,147 bales the day before.

Good rains in cotton belts and improved weather in key cotton-producing areas, including rain in the western Great Plains and milder conditions in West Texas, have provided relief to standing crops.

Industry experts suggest that cotton futures may stabilise within the 67-70 cents per pound range, with challenges expected in breaking the 70-cent barrier. Traders are awaiting the US Department of Agriculture's export sales report, which is due today, for a better understanding of demand and supply.

Currently, ICE cotton for December 2024 was traded at 69.11 cents per pound, up 0.56 cents. Cash cotton was traded at 64.24 cents (down 1.28 cents), the October contract at 68.74 cents (down 1.28 cents), the March 2025 contract at 70.78 cents per pound (up 0.58 cents), the May 2025 contract at 72.04 cents (up 0.59 cents), and the July 2025 contract at 72.82 cents (up 0.53 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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