ICE cotton gains on Chinese demand expectations & weather impact

Yesterday, the ICE cotton December contract settled at 73.61 cents per pound (0.453 kg), an increase of 0.89 cents.

The US dollar index traded steadily to slightly up, limiting gains in cotton. However, a similar trend in crude oil prices supported cotton futures, with crude oil showing positive sentiment on the back of potential demand improvements and rising tensions in the Middle East.

Trading volume reached 42,691 contracts, compared to 36,854 contracts cleared on Friday. As of the start of the day on September 30, total open interest stood at 230,546 contracts, an increase of 291 contracts from the previous Friday.

On the weather front, Hurricane Helene hit the Florida coast on Thursday night, bringing heavy rainfall and causing some destruction, particularly in key cotton-producing states such as Georgia and North Carolina. Early estimates suggest cotton crop losses could be around 500,000 bales, though some sources indicate there may be variations in these figures. Full assessments are still pending.

As of September 27, ICE's deliverable No. 2 cotton futures contract inventory remained unchanged at 265 bales.

Cotton traders expressed optimism about Chinese demand, pointing to the country’s recent economic stimulus measures. Demand is expected to rise as these measures take effect in the coming months.

According to the USDA’s weekly crop progress report for the week ending September 29, the quality rate of US cotton was 31 per cent, down from 37 per cent the previous week and 30 per cent in the same period last year, largely due to the impact of the hurricane. The report also noted a harvest rate of 20 per cent, up from 14 per cent the previous week, 17 per cent at the same time last year, and a five-year average of 16 per cent.

In summary, the market responded to potential crop losses from Hurricane Helene and positive signals from China’s economy, with funds adjusting their positions. The USDA report highlighted mixed conditions for the crop.

ICE cotton for December 2024 was last traded at 73.60 cents per pound, down 0.01 cent. Cash cotton was traded at 67.11 cents, up 0.89 cents. The October contract settled at 73.56 cents, up 0.02 cent; the March 2025 contract at 75.28 cents, down 0.08 cent; the May 2025 contract at 76.50 cents, down 0.02 cent; and the July 2025 contract at 77.13 cents, up 0.06 cent. A few contracts remained unchanged from the last closing, with no trades recorded today.

Fibre2Fashion News Desk (KUL)