ICE cotton dips due to profit booking & other negative factors

According to trade analysts, the US cotton July contract settled 133 points lower at 81.10 cents per pound (0.453 kg). The December contract settled at 78.10 cents, down 102 points on Wednesday.

The US dollar index climbed after the hawkish Fed stance, leading to the dollar index settling above 105 levels. This made cotton purchases expensive for foreign buyers. Crude oil prices also slid nearly one per cent, which softened the polyester value chain and negatively impacted cotton trade.

The trading volume was slightly lower yesterday, at 36,659 contracts, the lightest volume of the last five sessions. Total open interest saw a second day of liquidation, down 1,796 contracts, starting at 228,893 contracts. Certified stocks began yesterday at 193,691 bales, up 265 bales, resulting from 705 new certifications and 440 de-certifications. There were no bales awaiting review. The level of certified stocks might influence July’s price inversion over December, but this effect may take time.

Cotton markets faced pressure as better-than-expected rains fell in several cotton-growing regions of Texas and Oklahoma, although South Texas still needs rain. Another bearish factor was the USDA's weekly crop progress report, which indicated that 60 per cent of the cotton crop was in good-to-excellent condition.

Traders are now waiting for the US cotton export sales report, which will be released soon. The market may stay range-bound until then.

On Thursday, ICE cotton July 2024 traded 0.28 cents lower at 80.82 cents per pound. Cash cotton traded at 77.35 cents (down 1.33 cents), the October (new crop) contract at 80.32 cents (down 1.32 cents), the December 2024 contract at 77.76 cents (down 0.34 cents), the March 2025 contract at 79.27 cents per pound (down 0.36 cents), and the May 2025 contract at 80.58 cents (down 0.40 cents).

ALCHEMPro News Desk (KUL)