ICE cotton falls after touching 3-week high on Fed's 25 bps rate cut

ICE’s most active December 2025 contract settled at 67.25 cents per pound (0.453 kg), down 0.43 cent or 0.64 per cent. During the session, it touched its highest level since August 25 before reversing. The contract had risen for seven consecutive sessions, gaining 165 points before this pullback.

Trading volume totalled 38,237 contracts compared with 41,094 contracts in the previous session. Open interest rose by 594 contracts to 258,584 contracts, the highest since April 8, 2025. By contrast, open interest on China’s Zhengzhou Commodity Exchange (ZCE) dropped to its lowest level since November 2024.

The Federal Open Market Committee (FOMC) cut interest rates by 0.25 per cent, bringing the policy rate down to a range of 4.00-4.25 per cent. This marked the first rate cut since December 2024. US President Donald Trump had called for a larger cut earlier in the week, but the Fed opted for the quarter-point move.

Fed chairman Jerome Powell said the central bank was operating in a ‘meeting-by-meeting mode’, describing the cut as a risk-management step. He suggested there was no need for rapid or aggressive additional cuts at this stage. His comments supported the US dollar, making dollar-denominated commodities like cotton more expensive for international buyers.

Market participants are awaiting the USDA’s weekly export sales report due Thursday for clearer demand signals. Traders expect export sales to remain steady, though recent buying has been concentrated in Brazilian and Australian cotton, with comparatively lower demand for US cotton.

Analysts noted that while there are some good deals happening in the market, they are largely focused on Brazilian and Australian cotton rather than significant US cotton purchases.

Currently, ICE cotton for December 2025 is trading at 66.97 cents per pound (down 0.28 cent), cash cotton at 65.25 cents (up 0.11 cent), the October 2025 contract at 65.86 cents (down 0.53 cent), the March 2026 contract at 68.94 cents (down 0.26 cent), the May 2026 contract at 70.26 cents (down 0.28 cent) and the July 2026 contract at 71.13 cents (down 0.28 cent). A few contracts remained at their previous closing levels, with no trading recorded today.

ALCHEMPro News Desk (KUL)