Pic: Adobe Stock
Yesterday, the ICE cotton March 2025 contract settled at 66.04 cents per pound (0.453 kg), up by 0.16 cents. However, the contract had fallen to 65.01 cents during the session, the lowest level since October 2020. A late rally pushed the March and May contracts to positive closes.
Despite the late rally, the cotton market remains under pressure, with traders closely monitoring global trade developments and currency fluctuations.
The US dollar surged by nearly 2.5 per cent from the previous level. A stronger US dollar makes cotton purchases more expensive for overseas buyers. The increase in the dollar index, combined with US tariff hike announcements, raised concerns about a trade war, impacting agricultural exports. Oil prices rose amid choppy trading, gaining over $1 per barrel due to concerns about imports from major US crude oil suppliers. However, oil prices eased later as the market absorbed the impact of US tariff plans. US stock indexes closed lower on Monday, but the losses narrowed after the delay of tariff hikes for Mexico.
In Chicago, corn, wheat, and soyabean prices also fell due to the stronger dollar and trade-related uncertainties. Analysts noted that cotton prices are very cheap compared to alternative crops, which could lead to a significant reduction in US cotton planting acreage. The combination of a stronger dollar, trade tensions, and weak market sentiment contributed to the overall bearish tone in commodity markets.
Speculators increased their net short positions in ICE cotton futures and options by 764 contracts to 61,235 in the week ending January 28, according to CFTC data.
Presently, ICE cotton for March 2025 was traded at 66.72 cents per pound (up 0.68 cent). Cash cotton was traded at 63.54 cents (up 0.16 cent), the May 2024 contract at 67.70 cents per pound (up 0.59 cent), the July 2025 contract at 68.76 cents (up 0.54 cent), the October 2025 contract at 68.68 cents (down 0.31 cent), and the December 2025 contract at 68.93 cents (up 0.44 cent). A few contracts remained at the level of the last closing, with no trading noted today.
Fibre2Fashion News Desk (KUL)