ICE cotton under pressure following bearish WASDE report

According to trade analysts, the US cotton July contract settled 99 points lower at 71.74 cents per pound (0.453 kg). The December contract settled down 78 points at 71.65 cents on Wednesday.

The dollar index was below the 105 level before the Federal Reserve meeting, noted at around 104.80 yesterday. The lower dollar supported falling US cotton prices. Stronger crude oil also supported cotton prices, but the market was unable to find a trigger in the previous session.

Yesterday, the trading volume was noted as 61,038 contracts, compared to 69,380 contracts cleared on the previous day. The cotton market enjoyed hefty trading volumes despite lower levels. Certified stock levels started the day at 134,938 bales, an increase of 1,811 bales. This increase resulted from 1,814 new certifications and 3 decertifications. The increment in certified stocks is not a healthy sign for cotton prices.

The monthly USDA World Supply and Demand Report highlighted several key changes, particularly for the US. World ending stocks for 2024-25 were increased by 484,000 bales, with US ending stocks rising by 460,000 bales, mainly due to a 500,000-bale reduction in 2023-24 exports. Meanwhile, Brazil and Australia saw their 2023-24 export estimates rise by 300,000 and 200,000 bales, respectively. The report underscores the competitive landscape, with US exports estimated at 11.8 million bales for 2023-24 and 13 million for 2024-25, compared to Brazil's 12.4 million and 12.5 million bales for the same periods.

On Thursday, ICE cotton for July 2024 traded 0.08 cents lower at 71.66 cents per pound. Cash cotton was traded at 67.99 cents (down 0.99 cents), the October (new crop) contract at 72.60 cents (down 0.13 cents), the December 2024 contract at 71.57 cents (down 0.08 cents), the March 2025 contract at 73.09 cents per pound (down 0.07 cents), and the May 2025 contract at 74.61 cents (down 0.02 cents). Some of the contracts remained at the levels of their last closing, as trading was noted today.

ALCHEMPro News Desk (KUL)