ICE cotton slips amid stronger dollar, decline in other commodities

15 Nov '24

3 min read

ICE cotton slips amid stronger dollar, decline in other commodities

Pic: Adobe Stock

Insights

ICE cotton prices declined on Thursday due to a stronger US dollar and pressure from falling agricultural commodities.
Harvest progress reduced hedging pressure, while crude oil recovery limited the price drop.
The US dollar's rise discouraged foreign buyers, affecting demand.
Trade volume fell, and deliverable inventories increased sharply.
Market focus now shifts to USDA reports.

ICE cotton closed lower on Thursday, pressured by a stronger US dollar index and declining trends in other agricultural commodities. Increased harvesting also reduced hedging pressure on cotton, although a rebound in crude oil prices limited the fall in the natural fibre.

On Thursday, the ICE cotton March 2025 contract settled at 70.56 cents per pound (0.453 kg), down by 0.54 cents.

The US dollar index climbed to a one-year high, marking its fifth consecutive session of gains. A stronger dollar discouraged foreign buyers due to increased purchasing costs. However, NYMEX crude oil futures closed slightly higher on Thursday, supported by a significant drop in US fuel inventories. Nevertheless, concerns about demand due to the stronger dollar index persisted.

Other agricultural commodities also declined as the stronger dollar discouraged overseas buyers. Soybean and corn futures fell on the Chicago Board of Trade (CBOT), potentially impacted by anticipated changes in biofuel policies.

The trade volume for ICE cotton futures on the day was 64,892 contracts, still high but lower than the five-day average of over 95,000 contracts. For comparison, 91,091 contracts were cleared the previous day. ICE data showed a significant increase in deliverable cotton inventories as of 13 November, with stocks rising to 11,224 bales from just 174 bales on the previous trading day.

The US cotton harvest is reported to be approximately two-thirds complete. As a result, hedging pressure has somewhat eased, helping to limit the extent of the price decline in cotton.

Traders are now focused on the US Department of Agriculture’s (USDA) upcoming reports. The USDA’s annual report is scheduled for release on Friday, and the weekly export sales report, delayed by one day due to US Military Personnel Day, will also be released on Friday. These reports will provide insights into market demand and supply, helping traders adjust their positions based on export trends and crop forecasts.

Currently, ICE cotton for March 2025 is trading at 70.13 cents per pound (down 0.43 cent). Cash cotton settled at 64.32 cents (down 0.33 cent), with the December 2024 contract at 67.94 cents per pound (down 0.38 cent), the May 2025 contract at 71.52 cents (down 0.34 cent), the July 2025 contract at 72.73 cents (down 0.33 cent), and the October 2025 contract at 72.36 cents (down 0.52 cents). A few contracts remained at their last closing level, with no trading activity noted today.

Fibre2Fashion News Desk (KUL)

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