ICE cotton prices ease down on cheaper crude oil, ease in soybean

Yesterday, the ICE cotton March 2025 contract settled at 67.27 cents per pound (0.453 kg), down by 0.34 cents. Other contracts, except the December 2026 contract, lost 5 to 31 points.

Crude oil prices declined, making polyester cheaper, which will offer stiff competition to cotton fibre. However, the US dollar index dipped by 0.2 per cent to reach a one-month low, offering limited support to cotton prices.

The trading volume for the day was 35,519 contracts, lower than Friday’s 42,170 contracts, indicating subdued activity. Speculators increased their net short positions in ICE cotton futures by 3,183 contracts, bringing the total to 60,471 contracts as of 21 January, signalling a bearish sentiment.

Inventory for ICE’s deliverable No. 2 cotton futures contracts remained unchanged at 218 bales as of 24 January, reflecting stable supply levels.

CBOT soybean futures fell after Argentina announced a reduction in grain export taxes. This policy change could encourage Argentine farmers to sell more grain, intensifying global competition and indirectly putting pressure on cotton markets.

Cotton demand has improved significantly over the past three weeks, as analysts observed. However, this improvement has not yet been reflected in futures prices. Prices are expected to rise slightly in the coming weeks. According to the latest forecasts, Brazil's 2024-25 cotton production is likely to be reduced to 3.79 million tonnes, compared to 3.83 million tonnes in December. The revision is attributed to a reduction in planted acreage in the state of Mato Grosso, Brazil's top cotton-producing region.

Presently, ICE cotton for March 2025 was traded at 67.13 cents per pound (down 0.14 cent). Cash cotton was traded at 64.77 cents (down 0.34 cent), the May 2024 contract at 68.24 cents per pound (down 0.12 cent), the July 2025 contract at 69.42 cents (down 0.09 cent), the October 2025 contract at 69.56 cents (down 0.31 cent), and the December 2025 contract at 69.24 cents (down 0.11 cent). A few contracts remained at the level of the last closing, with no trading noted today.

ALCHEMPro News Desk (KUL)