ICE cotton struggles against rising dollar, falling soybean market

ICE cotton continued its declining trend for the fourth consecutive trading session yesterday. A bearish tone was noted as cotton futures followed the falling soybean futures. A stronger dollar index also contributed to lower buying as cotton purchases became costlier for overseas buyers.

Yesterday, the ICE cotton March 2025 contract settled at 68.08 cents per pound (0.453 kg), down by 0.61 cents. The contract touched a session low of 68.05 cents, just 0.15 cent above the contract low of 67.90 cents. Over the last 13 sessions, the March contracts have fallen in 12 sessions, resulting in a total loss of 385 points. Other contracts also lost between 282 and 411 points in the last 13 sessions.

ICE cotton prices continued their downward trend for the fourth consecutive session, influenced by declining soybean futures and a stronger dollar.
The March 2025 contract settled at 68.08 cents per pound, slightly above its low.
The broader cotton market reflected losses across various contracts, with overall weak demand exacerbated by a rising dollar and lower soybean prices.

The US dollar index rose, making dollar-denominated cotton more expensive for holders of other currencies, further weakening demand. The Federal Reserve cut the benchmark interest rate by 25 basis points but signalled a slower pace of rate cuts next year, contributing to market volatility.

The trading volume on December 18 was 35,824 contracts, slightly higher than the 33,649 contracts cleared the previous day. ICE deliverable stocks for No. 2 cotton futures contracts remained unchanged at 20,113 bales as of December 17.

The soybean market hit a four-year low, driven by expectations of a bumper Brazilian crop and changes in US biofuel policies that lowered soy oil prices. Cotton futures closely followed the soybean market’s decline, reflecting the correlation between these agricultural commodities.

According to market analysts, the dollar’s rise and soybean market trends were significant negative factors for cotton futures. The sustained bearish trend in cotton prices reflects a combination of macroeconomic pressures, currency fluctuations, and the impact of broader agricultural commodity trends.

Presently, ICE cotton for March 2025 was traded at 68.11 cents per pound (up 0.03 cent). Cash cotton was traded at 654.58 cents (down 0.61 cent), the May 2024 contract at 69.20 cents per pound (down 0.01 cent), the July 2025 contract at 70.23 cents (unchanged), the October 2025 contract at 68.90 cents (down 0.54 cent) and the December 2025 contract at 69.47 cents (down 0.08 cent). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)