ICE cotton prices rebound amid weaker dollar & strong export sales

Yesterday, the ICE cotton December contract settled at 71.05 cents per pound (0.453 kg), rising by 1.36 cents. The contract had previously reached its lowest level since September 11.

The dollar index fell following a 25-basis point interest rate cut by the Federal Reserve. Chairman Jerome Powell did not provide strong indications of an imminent pause in rate adjustments. This prompted traders to engage in profit-taking, leading to a drop in the dollar index. A weaker dollar makes US cotton purchases more attractive to international buyers.

Chicago corn and soybean futures climbed to a one-month high, driven by robust short-term export demand, despite the recent strength in the dollar. The gains in these commodities also boosted sentiment in US cotton.

ICE data revealed that as of November 6, the inventory of deliverable No. 2 cotton futures contracts remained unchanged at 174 packs.

The USDA’s export sales report, released on Thursday, showed a net increase of 229,000 bales in US cotton export sales for the current marketing year as of October 31. This marks a 21 per cent rise from the previous week and a 51 per cent increase compared to the four-week average.

Traders are now anticipating the release of the USDA’s November Global Agricultural Supply and Demand Estimates (WASDE) report, due later this evening.

According to market experts, the seasonal period for increased sales is beginning; however, strong sales from August to October could pose challenges, as approximately half of US cotton farms rely on rainfall and require the first freeze to begin harvesting.

Currently, ICE cotton for December 2024 was trading at 71.00 cents per pound (down 0.05 cent). Cash cotton traded at 66.80 cents (up 1.36 cents). The March 2025 contract was at 73.36 cents per pound (down 0.07 cent), the May 2025 contract at 74.69 cents (down 0.09 cent), the July 2025 contract at 75.74 cents (down 0.16 cent), and the October 2025 contract at 74.71 cents (up 0.80 cent). A few contracts remained at the previous closing level, with no trading noted today.

Fibre2Fashion News Desk (KUL)