ICE cotton falls on strong dollar, weak crude oil

The ICE cotton July 2025 contract settled at 65.57 cents per pound (0.453 kg), down 0.54 cent from the previous day. The December 2025 contract settled at 68.32 cents, down 31 points. Other contracts also closed lower, with losses ranging between 7 and 41 points.

The US dollar strengthened following improved consumer confidence data, making dollar-denominated cotton costlier for international buyers and dampening global demand.

NYMEX crude oil futures declined amid growing expectations that OPEC+ may increase production in its upcoming meeting, raising concerns of oversupply. Additionally, ongoing US-Iran negotiations added to crude market weakness, which indirectly pressured cotton as cheaper crude reduces polyester production costs, making it a more attractive substitute.

Daily trading volume rose significantly to 43,064 contracts, well above last week’s average of 32,311 contracts. Friday’s session (May 24) cleared 36,663 contracts.

The July contract touched an intraday high of 66.79 cents, briefly buoyed by improved sentiment after US President Trump announced a delay in implementing a 50 per cent tariff on EU imports until July 9.

The European Union reported that a weekend phone call between President Trump and EC President Ursula von der Leyen had provided ‘new impetus’ to trade talks, offering mild support to risk assets, including cotton.

In related markets, CBOT wheat futures fell for the third consecutive day due to beneficial rainfall across key growing regions, which improved crop moisture and boosted production expectations. Corn closed flat, while soybeans posted slight gains.

The US Commodity Futures Trading Commission (CFTC) report for the week ending May 20 revealed that speculators increased their net short positions in ICE cotton futures and options by 9,833 contracts, bringing the total net short to 57,136 contracts.

Technical resistance for the July 2025 contract is seen at 67.50 cents, with key support around 64.50 cents. Analysts expect sideways trading between these levels unless a major catalyst—such as a tariff resolution or significant supply-demand development—emerges.

Market analysts noted that, without a close above 67.50 cents or fresh news, the market is likely to remain range-bound between 64.50–67.50 cents.

Overall, ICE cotton remains under macroeconomic pressure with limited upside triggers, as traders closely monitor currency movements, energy markets, global demand signals, and geopolitical developments that could affect trade flows.

Currently, ICE cotton for July 2025 is trading at 65.32 cents per pound (down 0.24 cent), cash cotton at 63.82 cents (down 0.54 cent), the October 2025 contract at 68.02 cents (down 0.41 cent), the December 2025 contract at 68.08 cents (down 0.24 cent), the March 2026 contract at 69.64 cents per pound (down 0.17 cent), and the May 2026 contract at 70.74 cents (down 0.14 cent). A few contracts remained at their previous closing levels, with no trading recorded today.

ALCHEMPro News Desk (KUL)