ICE cotton struggle as dollar strengthens and export sales weaken

Yesterday, the ICE cotton December contract settled at 68.08 cents per pound (0.453 kg), down 0.91 cents. The contract faced pressure due to a stronger dollar index and weaker export sales.

The dollar index traded stronger yesterday as geopolitical tensions heightened. Crude oil declined from higher levels and settled nearly one per cent lower. A stronger dollar made cotton purchases less attractive for foreign buyers, while weaker crude oil also put pressure on cotton as polyester became cheaper.

There were fears of a recession that affected markets across the board. Even the prospects of a rate cut could not support the markets. US manufacturing activity slowed to its lowest level in eight months.

For 21 consecutive sessions, total open interest in the market has increased daily, indicating growing market participation or hedging activity. Over these 21 sessions, total open interest has risen by 22,664 contracts, signifying sustained interest and activity. As of today, total open interest stands at 231,347 contracts, having increased by 2,532 contracts from the previous day, which suggests continued engagement from market participants.

ICE's deliverable No. 2 cotton futures contract inventory stood at 26,763 bales as of July 31, compared to 28,745 bales in the previous three days.

There are some weather concerns in the Texas Delta, with temperatures relatively higher across cotton belts. Traders are closely monitoring any adverse weather conditions.

On Friday, ICE cotton for December 2024 was traded at 68.33 cents per pound, up 0.25 cents. Cash cotton traded at 62.98 cents (down 0.60 cents), the October contract at 67.53 cents (up 0.65 cents), the March 2025 contract at 69.92 cents per pound (up 0.22 cents), the May 2025 contract at 71.21 cents (up 0.23 cents), and the July 2025 contract at 72.22 cents (up 0.26 cents). A few contracts remained at the previous closing level, with no trading noted today.

Fibre2Fashion News Desk (KUL)