ICE cotton remains under pressure, touches 4-year low

25 Jul '24

2 min read

ICE cotton remains under pressure, touches 4-year low

Pic: Adobe Stock

Insights

ICE cotton prices continued to fall, reaching a nearly 4-year low due to favourable weather conditions and a downturn in equity markets.
The December contract settled at 68.65 cents per pound, down 0.83 cents.
Trading volume hit a 5-week high with increasing open interest.
The dollar index and crude oil prices slightly recovered, adding pressure on cotton.

ICE cotton continued to fall as there was no respite from pressure on prices. US cotton touched a four-year low as technical support remained elusive. External factors were also dampening market sentiment, although the dollar index was slightly lower. Favourable weather conditions and a decline in equity markets led to a slide in cotton prices.

Yesterday, the ICE cotton December contract settled at 68.65 cents per pound (0.453 kg), down 0.83 cents. The contract hit a nearly four-year low due to favourable weather and a downturn in the broader financial market. It touched as low as 67.51 cents yesterday, which was the lowest level since October 2020.

According to trade analysts, the dollar index was slightly lower yesterday. Crude oil also recovered after a steep decline. Falling oil prices make the polyester value chain cheaper, putting additional pressure on cotton as an alternative fibre.

Yesterday, the trading volume was 44,460 contracts, the highest in five weeks, with 37,135 contracts cleared the previous day. Total open interest increased for 15 consecutive sessions, adding 15,767 contracts since the near three-month low of 208,683 contracts on July 1.

Open interest began the day at 224,450 contracts, up 3,434 from the previous day. As per the latest reports, certified stock in the ICE cotton exchange remained unchanged at 38,466 bales.

The global stock market downturn, driven by disappointing earnings from companies like Tesla and Alphabet, also pressured the cotton market.

On Thursday, ICE cotton for December 2024 was traded at 68.46 cents per pound, down 0.19 cents. Cash cotton traded at 62.01 cents (down 1.02 cents), the October contract at 66.24 cents (down 0.77 cents), the March 2025 contract at 70.18 cents per pound (down 0.23 cents), the May 2025 contract at 71.57 cents (down 0.25 cents), and the July 2025 contract at 72.65 cents (down 0.28 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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