ICE cotton closes lower as strong dollar, demand worries weigh

The most actively traded March cotton contract rose 0.28 cents, or 0.43 per cent, to settle at 64.71 cents per pound. However, overall price action remained subdued due to the strengthening US dollar.

The US dollar index climbed to a six-week high after data showed an unexpected drop in initial US jobless claims, reinforcing expectations that the Federal Reserve will keep interest rates unchanged in the coming months.

Total trading volume reached 47,816 contracts, the lightest in the past nine sessions, though still elevated by historical standards. Average daily volume for the current week stands at 58,800 contracts, well above the 2025 full-year average of 48,062 contracts.

January-to-date average daily volume is running at a strong 61,390 contracts, making early January one of the most active periods on record. Open interest remains at all-time highs and has increased steadily in recent sessions, indicating aggressive participation. Index fund rebalancing is estimated to have added around 10,000 new long positions, while new short positions are also being built, limiting upside potential.

Weekly US cotton export sales for the current marketing year were reported at 339,700 bales, the highest weekly figure of the season. Export sales rose 247 per cent from the previous week and were 89 per cent above the four-week average, with net sales to mainland China increasing by 57,200 bales.

Despite the strong export data, market reaction remained muted, as traders largely anticipated the figures and continue to look for sustained strength over multiple weeks.

ICE certified deliverable No.2 cotton stocks as of January 14 remained unchanged at 11,029 bales, leaving a key market puzzle unresolved as heavy trading volume and rising open interest persist despite weak and stagnant price action.

This morning (Indian Standard Time), ICE March 2026 cotton was trading at 64.63 cents per pound (down 0.08 cent), cash cotton at 62.46 cents (down 0.28 cent), the May 2026 contract at 66.21 cents (down 0.06 cent), July 2026 at 67.64 cents (down 0.05 cent), October 2026 at 68.15 cents (down 0.30 cent), and December 2026 at 69.13 cents (up 0.03 cent). A few contracts remained unchanged, with no trading recorded so far today.

ALCHEMPro News Desk (KUL)