ICE cotton futures experienced a slight decline on Thursday, driven by a stronger dollar index and a cautious market approach.
The market’s limited movement comes as traders anticipate the USDA’s cotton export sales report, which is expected to provide valuable insights into current demand dynamics.
Cotton prices dip slightly
According to trade analysts, the ICE cotton December contract settled at 72.62 cents per pound (0.453 kg), marking a decrease of 14 points.
Similarly, the March contract dropped by 9 points, closing at 73.96 cents per pound.
Selling pressure was noted above the 73-cent level, contributing to the modest decline in prices.
The stronger dollar index, which settled above the 105 level, has negatively impacted commodities, including cotton, by making U.S. exports more expensive for foreign buyers.
Despite the stable crude oil prices, the higher dollar has been a key factor in discouraging cotton purchases in the U.S. market.
Thin trading volume and certified stock movements
After the holiday, ICE cotton experienced very thin trading volumes. On Thursday, the volume was recorded at just 32,185 contracts, the lowest in four weeks.
Certified stocks began the day at 136,187 bales, with 811 new certifications and 1,687 de-certifications. Additionally, there were 4,442 bales awaiting review.
The USDA also reported an increase in drought conditions in cotton-growing areas, now at 9 percent, up by one percent from the previous week.
Some regions in Texas and Oklahoma are experiencing hotter conditions, necessitating immediate rainfall to prevent damage to standing crops.
Mixed performance across different contracts
On Thursday, ICE cotton for July 2024 traded 0.44 cents lower, closing at 70.41 cents per pound. Cash cotton prices were at 65.88 cents, down by 1.94 cents.
The October (new crop) contract traded at 71.88 cents, also down by 1.94 cents. Meanwhile, the December 2024 contract settled at 72.36 cents per pound, down by 0.26 cents, and the March 2025 contract closed at 73.69 cents per pound, down by 0.27 cents.
The May 2025 contract saw a slight decline of 0.328 cents, closing at 74.96 cents per pound. Some contracts traded at the previous closing levels, indicating mixed activity in the market.
Anticipation of USDA cotton export sales report
Traders are keenly awaiting the USDA cotton export sales report, which is expected to shed light on the current demand scenario.
This report could serve as a crucial trigger for the market, influencing future price movements and trading strategies.
The cotton market remains sensitive to external factors such as currency fluctuations and weather conditions.
The stronger dollar has made U.S. cotton less competitive on the global market, while drought conditions in key growing regions continue to pose a threat to crop yields.
As the market navigates these challenges, traders and analysts will closely monitor the USDA report and other relevant data to make informed decisions.
The upcoming weeks will be critical in determining the direction of cotton prices and overall market sentiment.
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