ICE cotton slips amid weak oil & favourable weather conditions

ICE cotton continued to observe a declining trend due to weak crude oil prices and favourable weather conditions. However, the easing of the dollar index remained a positive factor, though it did not support cotton futures. Traders are still awaiting the US cotton export sales report, due today. It was not released as scheduled last Thursday.

 

Yesterday, the ICE cotton December contract settled at 69.44 cents per pound (0.453 kg), down 0.37 cents. The contract traded between 69.05 and 70.30 cents yesterday.

The dollar index remained weak due to signs of slowing US economic growth, which raised the possibility of more immediate interest rate cuts by the Federal Reserve. The weaker dollar helped cotton futures by limiting losses, as a declining dollar made cotton purchases more affordable.

However, declining crude oil prices put additional pressure on cotton futures. NYMEX crude oil futures hit a new low for the year due to growing concerns about demand and increased supply from Libya, which overshadowed the impact of a sharp cut in US inventories and the delayed production increase by OPEC+ countries.

The trading volume reached 26,113 contracts, with 32,402 contracts cleared the previous day. December open interest started the day at 140,154 contracts, down by 417 contracts from the previous day. ICE data from September 4 showed that deliverable No. 2 cotton futures contract inventory slightly decreased to 265 bales, down from 266 bales the previous trading day.

Traders are focusing on the US Department of Agriculture's weekly export sales report, which has been delayed to Friday due to the Labor Day holiday. The export sales report is expected to show relatively quiet activity, with no significant sales or shipment events for the past week.

Currently, ICE cotton for December 2024 is trading at 68.94 cents per pound, down 0.49 cents. Cash cotton was traded at 64.99 cents (down 0.40 cents), the October contract at 69.49 cents (down 0.40 cents), the March 2025 contract at 70.79 cents per pound (down 0.46 cents), the May 2025 contract at 72.05 cents (down 0.46 cents), and the July 2025 contract at 72.77 cents (down 0.39 cents). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)