ICE cotton rises on short covering, weaker US dollar, rising crude oil

The ICE July 2025 cotton contract settled at 66.13 cents per pound (0.453 kg), up 1.07 cents from the previous day, marking its first triple-digit gain since May 2. The December 2025 contract closed at 68.69 cents, up 107 points, also recording its largest single-day gain since May 2. Other contracts posted gains ranging from 50 to 89 points.

The weaker US dollar against other major currencies made US cotton more affordable for international buyers, encouraging overseas purchases. Crude oil surged nearly 4 per cent after OPEC+ maintained its July output increase at the same level as the previous two months. Higher crude oil prices make polyester—a man-made fibre alternative to cotton—more expensive to produce.

Despite Monday’s breakout, cotton prices continued to trade within a tight range for the 13^th consecutive session, signalling sustained consolidation.

Total trading volume reached 71,718 contracts, the highest since April 23. In comparison, Friday’s cleared contracts totalled 39,650, while the previous week’s average daily volume was 40,636 contracts.

The rally was largely driven by short covering, as speculators exited bearish positions following a strong overnight session and key resistance breakouts.

Market analysts noted that Friday’s reversal was linked to end-of-month repositioning, which carried over into Monday’s session with renewed short-covering momentum. Evidence also pointed to fresh selling at higher levels—likely from producers or merchants locking in sales or fixing July contracts to take advantage of improved prices.

In other commodity markets, Chicago wheat and corn posted gains, while soybeans continued to decline, adding mixed sentiment across the broader agricultural futures space.

Trade optimism also supported sentiment, with US President Donald Trump and Chinese President Xi Jinping expected to speak soon to address ongoing trade tensions, particularly concerning critical minerals. US Treasury Secretary Scott Bessent confirmed that the upcoming talks would focus on resolving disputes and stabilising the bilateral trade relationship.

Meanwhile, Trump announced a tariff hike to 50 per cent on steel and aluminium imports, causing domestic prices for these metals to spike and triggering a sell-off in shares of foreign steelmakers.

Presently, ICE cotton for July 2025 is being traded at 65.87 cents per pound (down 0.26 cent), cash cotton at 64.38 cents (up 1.07 cent), the October 2025 contract at 68.10 cents (up 0.01 cent), the December 2025 contract at 68.39 cents (down 0.30 cent), the March 2026 contract at 69.83 cents per pound (down 0.28 cent), and the May 2026 contract at 70.86 cents (down 0.25 cent). A few contracts remained unchanged, with no trading recorded today.

ALCHEMPro News Desk (KUL)