ICE cotton hits 15-month low as weak crude oil impacts market

According to trade analysts, the US cotton July contract settled at 76.51 cents per pound (0.453 kg) before dipping to 76.05 cents. The contracts lost 1,680 points in the last month from 93.31 cents on April 1, 2024. The December contract settled at 75.17 cents, experiencing losses of 918 points in the last month.

The US dollar index remained stronger during the session but eased after Fed meeting comments. A lower dollar index supported cotton prices at present levels. However, crude oil played an important role in pulling cotton down, with oil dropping nearly 3 per cent due to improved inventory and a relaxed situation in the Middle East.

Once again, trading volume was significant on Wednesday, with 56,592 contracts traded and 59,615 contracts traded, indicating strong activity in the market from both sides. Open interest for July increased, possibly due to new speculative short positions. Certified stocks in the ICE Cotton exchange started at 183,114 bales today, with some new certifications and de-certifications, along with 1,700 bales awaiting review.

The current market situation presents challenges for the cotton industry. Mills are benefitting from the current lower prices but are finding it difficult to strategize their buying amid price instability. US growers could suffer further financial losses if cotton prices fail to improve this season, potentially discouraging overall sowing in the US.

During Thursday's session, ICE cotton July 2024 was traded 0.61 cent higher at 77.12 cents per pound, while Cash cotton was traded at 72.26 cents (down 1.92 cents), May 2024 at 75.81 cents (down 2.11 cents), October (new crop) contract at 76.00 cents (down 1.26 cents), December 2024 contract at 75.43 cents (up 0.26 cent), and March 2025 at 77.14 cents per pound (up 0.35 cent).

Fibre2Fashion News Desk (KUL)