ICE cotton gains post-holidays as short covering lifts prices

The most active March 2026 cotton futures contract settled at 64.65 cents per pound, up 0.64 cent. The contract paused its downward trend after four consecutive declining sessions late last year. In the previous session, the March 2026 contract had touched its lowest level since December 23.

Higher international crude oil prices provided indirect support to cotton by making polyester fibre more expensive, improving cotton’s relative attractiveness.

Market strength was largely technical rather than fundamental, driven by traders covering short positions. Market analysts said the move was based on technical factors and short covering, with expectations of a short-term bounce. However, the rebound is unlikely to be sustained due to weak underlying fundamentals. Key bearish factors include soft demand, global oversupply, and tariff impacts on US cotton.

The United States Department of Agriculture (USDA) reported net US cotton export sales of 134,000 bales for the week ending December 25. This was 27 per cent lower week on week and 31 per cent below the four-week average.

Chicago Board of Trade grain and soybean futures also closed higher, supported by weather assessments and post-holiday fund adjustments.

ICE-reported deliverable No. 2 cotton stocks stood at 11,510 bales as of January 2, unchanged from December 31.

Commodity Futures Trading Commission data showed speculators reduced net short positions by 786 contracts, bringing total net shorts down to 51,552 contracts for the week ending December 30.

This morning (Indian Standard Time), ICE cotton for March 2026 was trading at 64.89 cents per pound (up 0.24 cent), cash cotton at 62.40 cents (down 0.64 cent), the May 2026 contract at 66.24 cents (up 0.25 cent), the July 2026 contract at 67.49 cents (up 0.18 cent), the October 2026 contract at 67.94 cents (up 0.52 cent), and the December 2026 contract at 68.75 cents (up 0.15 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.

ALCHEMPro News Desk (KUL)