ICE Cotton Holds Steady Amidst Mixed Market Sentiments
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- Published: Saturday, 08 June 2024 15:46
The ICE cotton market maintained its resilience, registering modest gains across various contracts, despite some disappointing data on US cotton export sales. Traders kept a keen eye on market dynamics, with the rally in crude oil prices and a weaker dollar index offering support to cotton prices.
According to trade analysts, the US cotton July contract saw a modest uptick of 100 points, settling at 75.44 cents per pound (0.453 kg). This marked the third consecutive trading session witnessing an upward trend. The December contract also closed higher, up 9 cents at 73.60 cents on Wednesday.
The decline in the dollar index contributed to the positive momentum in cotton prices, as central banks began reducing interest rates. The European Central Bank's decision to reduce rates by 0.25 per cent to 3.75 per cent and the anticipation of a similar move by the US Federal Reserve weighed on the dollar index. Additionally, the surge in crude oil prices by more than two per cent added to the attractiveness of cotton purchases.
Trading activity was notable in the July month, particularly on the last session of options expiry, with a final trading volume of 53,605 contracts. Certified stocks showed a slight increase, beginning at 129,146 bales and rising by 1,156 bales in new certifications, while around 3,531 bales awaited review.
Despite a decrease in net Upland sales for the 2023-24 season by 38 per cent from the previous week, totaling 138,700 RB (running bales) for the week ending May 30, 2024, the market fundamentals remained unchanged. With no major triggers available, market focus shifted to the upcoming WASDE report due next week.
Closing the week on Friday, ICE cotton July 2024 saw a slight dip of 0.06 cent, trading at 75.38 cents per pound. Cash cotton was traded at 71.69 cents, marking an increase of 1.00 cent. October (new crop) contract closed at 75.57 cents (up 0.47 cent), December 2024 contract at 73.63 cents (up 0.03 cent), March 2025 at 75.43 cents per pound (up 0.01 cent), and May 2025 at 77.41 cents (up 0.42 cent).
Amidst mixed market sentiments, the cotton market continues to navigate through various factors, with traders closely monitoring developments for potential shifts in demand and supply dynamics.