Rising crude oil & falling dollar drive ICE cotton gains

ICE cotton continued to make gains due to a falling dollar index and stronger crude oil prices. The dollar index weakened further following the Federal Reserve’s policy review meeting. After touching a four-year low last week, US cotton remained positive this week and reached a new monthly high. Although there are still concerns about demand, the market is currently focused on weather disruptions and support from external factors.

Yesterday, the ICE cotton December contract settled at 70.91 cents per pound (0.453 kg), up 1.57 cents. The contract reached an intraday high of 71.25 cents. Over the week, the contract has gained 5.5 per cent. This week has been the best performing in the last three months.

ICE cotton prices have risen due to a weaker dollar index and stronger crude oil prices.
December contract reached a monthly high at 70.91 cents per pound, up 1.57 cents.
The dollar’s decline, following the Federal Reserve’s policy review, made US cotton more attractive to international buyers.
Traders are hoping for a demand revival to maintain momentum.

The dollar index decreased significantly and ended with heavy losses of 0.8 per cent following comments from the Fed chairman Jerome H. Powell. He said that while inflation is closer to the Federal Open Market Committee’s 2 per cent goal, and labour conditions have normalised, further policy adjustments will depend on ongoing economic data and risks.

The index dropped to nearly an eight-month low of 100, making US cotton more affordable for overseas buyers. Meanwhile, crude oil prices improved from lower levels, gaining more than 2 per cent, which made the cotton alternative, man-made fibre polyester, more expensive. This also supported US cotton prices.

Trading volume was robust, with more than 32,000 lots traded. According to the latest reports, ICE cotton stocks dropped from 12,767 bales to 9,413 bales on August 22.

The market has recovered from lower levels due to support from external factors and weather issues, but it needs a revival in demand to sustain momentum. Traders are waiting for a recovery in demand to maintain the current trend.

ICE cotton for December 2024 settled at 70.91 cents per pound, up 1.57 cents on Friday. Cash cotton settled at 66.79 cents (up 1.70 cents), the October contract at 71.29 cents (up 1.70 cents), the March 2025 contract at 72.28 cents per pound (up 1.42 cents), the May 2025 contract at 73.38 cents (up 1.33 cents), and the July 2025 contract at 73.92 cents (up 1.25 cents).

Fibre2Fashion News Desk (KUL)