ICE cotton prices plummet amid weak demand, rising stock levels

12 Apr '24

2 min read

ICE cotton prices plummet amid weak demand, rising stock levels

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Insights

ICE cotton prices dipped yesterday, with most contracts dropping by up to 2 US cents amid weak demand, stronger dollar and falling crude oil prices.
USDA's export sales report and rising certified stock levels further pressured the market.
May contract notably fell by 2.02 cents to 83.37 cents per pound.
Market activity was high with 86,762 contracts trade.

ICE cotton experienced a significant downturn yesterday, with most contracts declining by up to 2 US cents. Market sentiment was negatively impacted by the USDA's latest weekly export sales report. Concurrently, an increase in certified stock levels added downward pressure on the trading environment. Specifically, the ICE cotton May contract plummeted by 2.02 cents, settling at 83.37 cents per pound (0.453 kg), and even dipped to a session low of 83.15 cents.

According to a market analyst, last night saw weak demand, a stronger dollar, and weaker crude oil prices. The weekly export sales report and the WASDE report were additional dampening factors for the market. The July and December contracts also noted a declining trend. The increase in the dollar made cotton less attractive to foreign buyers.

Today's volume in the cotton market reached 86,762 contracts, following a high of 94,166 contracts yesterday. Over the last five sessions, the average volume has been around 85,962 contracts, significantly higher than the 2024 daily average of 56,831 contracts. Open interest started the session at 233,271 contracts, marking the lowest level since January 23 and the sixth consecutive drop.

The rise in certified stocks of ICE cotton also discouraged buyers. Yesterday, certified stocks were at 155,045 bales, the highest since June 28, 2021, with 1,090 bales awaiting review.

During today’s session, ICE cotton for May 2024 traded 0.36 cent lower at 83.01 cents per pound. Meanwhile, Cash was traded at 79.87 cents per pound (-1.94 cents), July 2024 at 85.04 cents per pound (-0.35 cent), the October (new crop) contract at 81.57 cents per pound (-1.09 cents), the December 2024 contract at 80.72 cents per pound (+0.03 cent), and March 2025 at 81.74 cents per pound (-0.07 cent).

Fibre2Fashion News Desk (KUL)

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