ICE cotton up amid weak dollar, stronger grains & weather concerns

Yesterday, the ICE cotton March 2025 contract settled at 68.68 cents per pound (0.453 kg), up by 1.02 cents.

The US dollar weakened significantly, dropping 1.07 per cent against a basket of currencies. This makes cotton purchases more affordable for foreign buyers. Crude oil prices gained on a weaker dollar and higher heating energy demand due to winter storms. However, negative economic prospects in the US and Germany led to volatility in crude oil prices.

Positive market sentiment from CBOT grain futures (soybeans, corn, and wheat), crude oil, and stock markets also influenced cotton prices. CBOT grains recovered losses from the previous session, supported by dry weather in Argentina and a sharp drop in the dollar.

Hot and dry conditions in northern Argentina, southern Brazil, and Australia are impacting the cotton-growing seasons, adding bullish pressure to the market.

According to market analysts, the cotton market remains oversold. Farmers are likely to sell last year's production as prices rise, and once transferred to traders, the market may experience a rebound.

Brazil's cotton exports in December 2024 reached 352,853.44 tons, up 0.58 per cent from 350,804.44 tons in December 2023, as reported by Brazil's Foreign Trade Secretariat.

ICE deliverable No. 2 cotton futures stocks were steady at 20,113 packages as of January 3, 2025, according to data released by the Intercontinental Exchange (ICE).

Currently, ICE cotton for March 2025 is traded at 68.83 cents per pound (up 0.15 cent). Cash cotton is traded at 66.18 cents (up 1.02 cents), the May 2024 contract at 69.93 cents per pound (up 0.11 cent), the July 2025 contract at 70.86 cents (up 0.01 cent), the October 2025 contract at 69.40 cents (up 0.92 cent), and the December 2025 contract at 69.89 cents (down 0.01 cent). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)