Fed rate cut expectation lifts ICE cotton; market to consolidate

ICE March 2026 cotton futures settled at 64.00 cents per pound, up 0.15 cents. The contract traded within a tight 55-point range between 6,389 and 6,444 points. Other contracts moved between 2 points lower and 16 points higher.

Total daily futures volume was 33,815 contracts, lighter than usual, and included a large 4,000-contract EFS trade. Friday’s cleared volume stood at 35,770 contracts. Certified stocks remained unchanged at 20,344 bales, with no bales awaiting review.

March open interest reached a new contract high of 176,805 contracts after rising 1,686 on Friday, while total open interest increased by 1,952 to 276,964, the first rise in six sessions. March briefly moved above its 10-day moving average during intraday trading but closed back below it after 11 consecutive sessions trading under both short- and long-term averages.

Options activity dropped sharply to 1,736 total contracts (1,072 calls and 664 puts), far below Friday’s exceptionally heavy 21,755 contracts (17,300 calls and 4,455 puts).

Market analysts said the market is likely to consolidate, with buyers active on declines and sellers on rallies, keeping prices in a sideways pattern until fresh data emerges.

Falling US interest rates would boost cotton demand and support prices if the Fed proceeds with rate cuts. According to CME FedWatch, traders currently assign a 79 per cent probability to a Federal Reserve rate cut next month, lifting overall sentiment.

ICE cotton speculators increased their net short positions by 3,861 contracts to 142,589 contracts for the week ending October 7, indicating persistent bearish pressure from speculative players.

USDA’s crop progress report after market close showed the US cotton harvest at 79 per cent complete as of November 23, up from 71 per cent the previous week. This remains below last year’s 83 per cent, but close to the 5-year average of 80 per cent.

This morning (Indian Standard Time), ICE December 2025 cotton was trading at 61.44 cents per pound (up 0.09 cent). Cash cotton was at 62 cents (up 0.15 cent), March 2026 at 64.24 cents (up 0.24 cent), May 2026 at 65.46 cents (up 0.23 cent), July 2026 at 66.53 cents (up 0.19 cent), and October 2026 at 67.24 cents (up 0.02 cent). A few contracts were unchanged, with no trades reported so far today.

ALCHEMPro News Desk (KUL)