ICE cotton marks longest decline in months, strong dollar drives slide

ICE cotton recorded its longest losing streak in months, continuing to decline on the sixth consecutive trading day yesterday. The dollar index reached a two-year high due to signals of slower rate cuts. A stronger dollar dampened market sentiments not only for cotton but also for other commodities. The cotton futures have yet to find support after a continued bearish trend. US cotton exports increased on a week-on-week basis but slowed from the four-week average.

Yesterday, the ICE cotton March 2025 contract settled at 67.91 cents per pound (0.453 kg), down by 0.17 cents. The contract touched a session’s low of 67.56 cents—the lowest since September 9.

ICE cotton experienced its longest losing streak in months, with the March 2025 contract settling at 67.91 cents per pound, down by 0.17 cents.
The dollar index reached a two-year high, impacting commodity prices due to a stronger dollar making cotton more expensive for foreign buyers.
Trading volumes decreased slightly, and despite a weekly increase, US cotton exports fell below 4-week average.

The US dollar index rose by 0.3 per cent, hitting a two-year high. The Federal Reserve signalled slower-than-expected interest rate cuts in 2025. A stronger dollar makes cotton more expensive for holders of other currencies, further weakening demand.

The trading volume was 34,421 contracts, slightly down from the previous day’s 35,824 contracts. ICE data as of December 18 showed no change in the deliverable No. 2 cotton futures contract inventory, which remained at 20,113 bales.

The USDA’s export sales report for the week ending December 12 showed a net increase of 194,900 bales in the current marketing year, up 27 per cent from the previous week but 19 per cent below the four-week average.

Market analysts stated that the significant negative impact of the stronger dollar was evident on US cotton and other commodities.

Technical and fundamental indicators continue to provide limited support, leaving market sentiment bearish. The broader commodity sector, influenced by the stronger dollar and weak grain markets, added to the downward pressure.

The cotton market remains under macroeconomic pressure, with traders awaiting further cues from global demand and potential shifts in the dollar’s trajectory.

Presently, ICE cotton for March 2025 was traded at 68.08 cents per pound (up 0.17 cent). Cash cotton was traded at 64.41 cents (down 0.17 cent), the May 2024 contract at 69.23 cents per pound (up 0.20 cent), the July 2025 contract at 70.21 cents (up 0.23 cent), the October 2025 contract at 68.63 cents (down 0.27 cent), and the December 2025 contract at 69.34 cents (up 0.22 cents). A few contracts remained at the level of the last closing, with no trading noted today.

Fibre2Fashion News Desk (KUL)