ICE cotton slips to two-month low on strong dollar, weak oil

07 Nov '24

2 min read

ICE cotton slips to two-month low on strong dollar, weak oil

Pic: Adobe Stock

Insights

ICE cotton fell to a two-month low due to a stronger US dollar and declining crude oil prices, which make cotton purchases more expensive for international buyers and reduce the cost of synthetic alternatives like polyester.
The December contract closed at 69.69 cents per pound, its lowest since September 11.
Traders now await the USDA's weekly export sales report.

ICE cotton experienced a downward trend yesterday, falling to a two-month low due to a stronger US dollar and weaker crude oil prices. An increase in the dollar index makes cotton purchases more expensive for overseas buyers. The decline in crude oil prices also impacted cotton, as it reduces the cost of producing polyester, a synthetic alternative to natural cotton.

Yesterday, the ICE cotton December contract settled at 69.69 cents per pound (0.453 kg), down by 0.26 cents. The contract reached a low of 68.95 cents, marking its lowest level since September 11.

WTI crude oil declined by 3 per cent following an increase on Tuesday. This decrease contributed to the downward movement of US cotton. The US dollar index surged to a four-month high due to expectations of economic growth driven by new US immigration and tax policies. A stronger dollar index makes cotton purchases more expensive for international buyers.

Market participants are now awaiting the US Department of Agriculture's (USDA) weekly export sales report, which is set to be released today. Additionally, the USDA is scheduled to publish its November global crop supply and demand report on November 9. These reports are expected to provide further insight into the supply and demand conditions of the cotton market.

According to data from the Intercontinental Exchange (ICE) on November 5, ICE’s deliverable cotton futures contract stocks remained stable at 174 bales.

Currently, ICE cotton for December 2024 is trading at 70.40 cents per pound, up by 0.71 cents. Cash cotton is being traded at 65.44 cents, down by 0.26 cents. The March 2025 contract is at 72.71 cents per pound, up by 0.63 cents; the May 2025 contract at 74.12 cents, up by 0.59 cents; the July 2025 contract at 75.34 cents, up by 0.55 cents; and the October 2025 contract at 73.91 cents, down by 0.25 cents. Some contracts remain unchanged from the last closing, with no trading activity noted today.

Fibre2Fashion News Desk (KUL)

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