ICE cotton further eases on slow export and weaker crude oil

Yesterday, ICE cotton December contract settled at 73.02 cents per pound (0.453 kg), down by 0.18 cent. The contract had touched three-months high earlier this week.

Dollar index slipped 0.3 per cent, which made cotton purchase more attractive for overseas buyers. It has capped losses in cotton futures. But decline trend in crude oil added pressure on US cotton. Crude oil further slipped more than 1.5 per cent yesterday.

Total 40,696 contracts were traded in terms of volume, compared to 32,851 contracts cleared the previous day. Open interest increased slightly, starting the day at 230,848 contracts, up by 477 contracts.

The market showed a sideways movement, seemingly unconcerned about Hurricane Helene’s approach to the Southeast US. Traders did not view the storm as particularly threatening to cotton at the moment. There is a belief growing in the market that Hurricane Helene may hit cotton crops in South Georgia and cause significant damage. However, this is yet to be confirmed.

The US Department of Agriculture’s (USDA) weekly export sales data revealed a decrease in cotton export sales for the current marketing year, totalling 87,800 bales. This was a drop of 18 per cent from the previous week and 38 per cent below the four-week average.

The market participants questioned why cotton prices had not increased significantly, pointing to the weak export data as the main reason for subdued demand. A weaker US dollar, along with potential Chinese stimulus measures and drought conditions in Brazil, might provide support for cotton prices.

Currently, ICE cotton for December 2024 is trading at 73.56 cents per pound, up 0.54 cent. Cash cotton was traded at 66.52 cents (down 0.18 cent), the October contract at 73.86 cents (down 0.16 cent), the March 2025 contract at 75.27 cents per pound (up 0.50 cent), the May 2025 contract at 76.54 cents (up 0.67 cent), and the July 2025 contract at 76.95 cents (up 0.61 cent). A few contracts remained at the level of the last closing, with no trading noted today.

ALCHEMPro News Desk (KUL)