Yesterday, the ICE cotton December contract settled at 68.21 cents per pound (0.453 kg), up 0.52 cents. Most cotton contracts saw gains after decline in the five consecutive trading sessions.

Brent crude oil futures fell below $70 per barrel for the first time since December 2021, following reduced demand forecasts from OPEC+ for this year and the next. The drop in crude prices dampened market sentiment, limiting cotton futures' gains, despite supply concerns caused by the storm.

Trading volume in the cotton market was robust, with 28,936 contracts traded, nearly matching the previous day's volume of 28,007 contracts. Open interest dropped by 704 contracts to 231,991, indicating some traders exited their positions ahead of the expected storm damage and the upcoming WASDE report.

On the weather front, Tropical Storm Francine is particularly threatening Louisiana and Arkansas, key cotton-producing states. The US National Hurricane Center has issued warnings, forecasting that Francine will strengthen into a hurricane and make landfall on the Louisiana coast by September 11.

The USDA's weekly crop progress report, released on September 8, showed a decline in US cotton quality ratings from 44 per cent to 40 per cent within a week. This drop in quality is seen as a bullish signal for cotton prices. The US cotton harvest rate reached 8 per cent last week, up from 7 per cent during the same period last year and higher than the five-year average of 6 per cent.

The deteriorating crop quality, combined with the slow pace of the harvest, has contributed to the upward trend in cotton prices as traders anticipate a tighter supply. The market is now awaiting the WASDE report, expected tomorrow, to gain insight into the demand-supply situation. Although demand remains sluggish, any reduction in crop size is likely to push prices higher.

ICE cotton for December 2024 traded at 68.49 cents per pound, up 0.28 cents. Cash cotton traded at 63.58 cents (up 0.54 cents), the October contract at 68.08 cents (up 0.54 cents), the March 2025 contract at 70.15 cents (up 0.31 cents), the May 2025 contract at 71.45 cents (up 0.32 cents), and the July 2025 contract at 72.26 cents (up 0.25 cents). A few contracts remained unchanged, with no trading recorded today.

Fibre2Fashion News Desk (KUL)