ICE cotton gains on short covering, weaker dollar support

The most active March 2026 cotton futures settled at 64.01 cents per pound, up 0.40 cent. On a weekly basis, the contract still showed a marginal decline of around 0.1 per cent.

Cotton has declined by 6.4 per cent so far in 2025, significantly lagging other commodities. Gold has surged 70.6 per cent, while silver has jumped 143.3 per cent this year.

The US dollar weakened despite strong economic data, with the Dollar Index down 0.3 per cent, supporting dollar-denominated commodities. A weaker dollar made US cotton cheaper for overseas buyers, improving export competitiveness.

Daily trading volume reached 40,005 contracts, compared with 33,925 contracts cleared in the previous session, a healthy level for a holiday week.

ICE inventory data showed deliverable No.2 cotton stocks at 11,600 bales as of December 22, compared with 12,396 bales on the previous trading day, indicating a day-to-day decline in certified stocks.

Market participants noted that speculative short covering dominated trade after prices dipped towards 63 cents, with limited but supportive commercial buying. Market analysts said cotton prices were viewed as “quite cheap”, encouraging short covering and selective buying.

Agricultural commodities overall continue to struggle for upside momentum, with holding above contract lows being the key recent achievement.

Expectations of a Federal Reserve rate cut in 2026 weighed on the dollar, even as US growth data surprised on the upside.

The US Department of Agriculture reported net US cotton export sales of 304,700 bales for the week ending December 11. Weekly export sales were up 99 per cent from the previous week and 95 per cent above the four-week average.

In other grain markets, corn futures closed higher, supported by strong export sales and a year-end rally.

Investors typically unwind or rebalance positions ahead of the Christmas and New Year holidays, contributing to mixed volatility.

Broader financial markets were firm, with the S&P 500 closing at a record high. US equity strength was supported by strong Q3 economic growth data, driven primarily by robust consumer spending.

Rising Treasury yields and strong growth stocks added to optimism, reinforcing expectations of a Santa Claus Rally towards year-end.

This morning (Indian Standard Time), ICE cotton for March 2026 traded at 64.11 cents per pound (up 0.10 cent), cash cotton at 61.76 cents (up 0.40 cent), the May 2026 contract at 65.29 cents (up 0.09 cent), the July 2026 contract at 66.37 cents (up 0.10 cent), the October 2026 contract at 66.66 cents (up 0.29 cent), and the December 2026 contract at 67.50 cents (up 0.04 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.

ALCHEMPro News Desk (KUL)