ICE cotton futures declined by over one percent, hitting its lowest level in the last five months. A stronger dollar makes US cotton purchases more expensive, which dampened buying from overseas buyers, especially slower buying from China. The weaker dollar also added to the weakness in US cotton futures. Higher US retail sales data raised expectations of a cautious stance on interest rate cuts, keeping the dollar stronger, which further weighed on cotton prices.
Yesterday, the ICE cotton March 2025 contract settled at 66.60 cents per pound (0.453 kg), down by 1.04 cents. The contract touched a low of 66.60 cents, marking the weakest price since August 2024.
A stronger US dollar put additional pressure on cotton prices, as dollar-dominated commodities became less competitive for international buyers. The currency’s trend reduced demand from foreign markets, particularly from key importers like China. US retail sales numbers were better, raising expectations that the Federal Reserve would maintain its cautious stance on interest rate cuts, keeping the dollar stronger, which also weighed on cotton prices.
Falling crude oil prices also added downward pressure on cotton by making polyester, a cotton substitute, relatively cheaper. The cost dynamics of raw materials intensified competition between cotton and synthetic fibres in the textile industry.
China's reduced buying activity further weighed on the market. The strong dollar is weighing on prices, and China is not buying aggressively, indicating limited demand from one of the largest global cotton consumers.
The USDA's weekly export sales report provided mixed signals. For the week ending January 9, the US exported 224,800 bales of cotton, reflecting a 17 per cent increase from the previous week and a 56 per cent rise from the four-week average. However, export sales to mainland China remained modest, with only 25,000 bales shipped during the period.
ICE cotton inventory levels remained stable, with deliverable No. 2 contracts at 218 bales as of January 15, unchanged from the previous trading session.
Presently, ICE cotton for March 2025 is traded at 67.02 cents per pound (up 0.29 cent). Cash cotton is traded at 64.23 cents (down 1.04 cents), the May 2024 contract at 68.16 cents per pound (up 0.31 cent), the July 2025 contract at 69.20 cents (up 0.32 cent), the October 2025 contract at 68.11 cents (down 0.89 cent), and the December 2025 contract at 68.85 cents (up 0.32 cent). A few contracts remained at the level of the last closing, with no trading noted today.
