ICE cotton up on crude oil rally; market ignores weak exports & demand

ICE cotton prices rose yesterday, driven by a sharp increase in crude oil prices. The surge in US crude oil consumption and concerns about potential supply disruptions in the Middle East fuelled energy prices. Despite negative factors such as weak US cotton export sales and uncertainty around global demand, the cotton market largely ignored these issues. Traders are now awaiting the USDA’s WASDE report for further insights on demand and supply.

Yesterday, the ICE December cotton contract settled at 72.66 cents per pound (0.453 kg), an increase of 0.41 cents. Other contracts saw price movements ranging from 0.14 cents lower to 0.52 cents higher this week.

ICE cotton prices rose due to higher crude oil prices, driven by increased US consumption and supply risks in the Middle East.
Weak US cotton export sales were largely overlooked as traders await the USDA’s WASDE report.
Crude oil’s rise also impacted polyester fibre costs.
ICE December cotton settled at 72.66 cents, with other contracts showing mixed movements.

NYMEX crude oil prices rose by 3.6 per cent on Thursday, supported by increased fuel consumption in the US and risks in the Middle East. Energy demand is expected to grow in both the US and China. The rise in crude oil prices also lifted polyester fibre costs, a man-made alternative to cotton.

Trading volume on October 10 was 35,499 contracts, the lowest of the week, while cleared contracts for the day totalled 38,100. Total open interest decreased by 3,153 contracts to 241,618, marking its first decline in five sessions. As of October 9, ICE’s deliverable cotton futures contract stocks remained unchanged at 265 bales.

US cotton export sales for the current market year amounted to 89,600 bales, down 7 per cent from the previous week and 12 per cent from the four-week average. The weak export sales report seems to have already been factored into market prices. There is uncertainty about where new demand for cotton will come from, adding to market hesitation.

Investors are cautious ahead of the US Department of Agriculture’s (USDA) monthly supply and demand report. Analysts are predicting a potential decline in US cotton production, coupled with weaker export demand.

As of now, ICE December 2024 cotton is trading at 72.57 cents per pound, down 0.09 cents. Cash cotton is trading at 66.66 cents (up 0.41 cents), the March 2025 contract at 74.67 cents per pound (down 0.08 cents), the May 2025 contract at 76.03 cents (down 0.08 cents), the July 2025 contract at 76.86 cents (down 0.08 cents), and the October 2025 contract at 75.07 cents (up 0.41 cents). A few contracts remained unchanged from the previous close, with no trading noted today.

Fibre2Fashion News Desk (KUL)