ICE Cotton Rally Fizzles Out Amidst Market Uncertainty
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- Published: Friday, 26 April 2024 11:56
The recent surge in ICE cotton prices, witnessed on Monday, was short-lived as market confidence took a hit due to concerns over demand improvement. Despite opening high on Tuesday, the market failed to sustain momentum throughout the day, lacking support from robust external factors. Weakness in the flash US Composite Purchasing Managers Index (PMI) underscored vulnerabilities in the manufacturing sector, contributing to the market's downward trend.
The ICE cotton July contract settled 70 points lower at 81.72 cents per pound, while the December contract also saw a decline of 41 points to 78.08 cents per pound. Although ICE cotton experienced a significant decline of up to 2 per cent the previous night, supportive external factors helped limit the fall during the current session.
Yesterday, the dollar index weakened following a decrease in the flash US PMI from 52.1 to 50.9 in March 2024, hovering just above the threshold indicating economic expansion. A softer dollar rendered cotton more affordable for foreign buyers. Additionally, crude oil prices showed a slight increase, contributing to the cotton market's stability.
Trading volume for ICE cotton slowed down, with yesterday's volume reaching 38,862 contracts. Although this figure is historically high, it represents a decline from the average volume of 56,851 contracts seen in 2024. Open interest saw a third consecutive day of increases, rising by 758 contracts to reach 204,512 contracts. Certified stocks in the ICE cotton exchange began the day at 176,785 bales, witnessing an increase of 175 bales in new certifications, with 6,087 bales awaiting review.
During today's session, ICE cotton July 2024 traded 0.42 cent lower at 81.30 cents per pound. Cash cotton was traded at 77.47 cents, representing a decrease of 0.70 cent, while May 2024 saw a slight increase to 80.22 cents (up 0.18 cent). The October (new crop) contract traded at 79.04 cents (down 0.18 cent), the December 2024 contract at 77.70 cents (down 0.38 cent), and the March 2025 contract at 79.44 cents per pound (down 0.32 cent).
Despite the recent fluctuations, uncertainties surrounding market demand and external factors continue to influence the ICE cotton market, emphasizing the need for vigilance and strategic decision-making among traders and investors.