Fashion
ICE cotton drops sharply as overbought market triggers sell-off
The most traded July 2026 contract settled at 77.98 cents, down 3.62 cents or 4.40 per cent. The contract recorded a massive breakdown, closing below the critical 80-cent threshold for the first time since April 29. It hit an intraday low of 77.70 cents per pound, marking its lowest settlement in a month.
ICE cotton futures plunged sharply as overbought conditions triggered aggressive liquidation across contracts.
The July 2026 contract fell 4.4 per cent to settle at 77.98 cents per pound, slipping below the key 80-cent mark for the first time since April 29.
Favourable US weather, easing crop risks, a stronger dollar and weak broader markets weighed heavily on sentiment.
The December contract settled at 79.73 cents, down 3.23 cents. It also breached the key psychological level of 80 cents, erasing recent gains that had previously driven the contract to an overbought peak of 88.08 cents. Other contracts closed lower across the board, with losses ranging from 147 points to 334 points amid heavy long liquidation.
Total daily trading volume reached 90,388 contracts, marking a massive surge in market participation and a sharp breakout from recent quiet sessions. The previous session’s cleared volume stood at 52,977 contracts, representing the calm before the day’s heavy sell-off.
Market sentiment turned deeply bearish due to a combination of technical corrections from overbought conditions, a rising US Dollar Index (99.218), and a weakening Indian rupee at 96.20.
Drought-monitoring and agricultural data showed a rapid easing of crop risks, as highly favourable weather and excellent early crop emergence across key growing regions accelerated. Weather forecasts specifically indicated ideal soil moisture conditions extending from Louisiana to Georgia, supporting optimal crop development.
Market analysts said that while the fundamental bullish story may not be entirely over, the strong upward momentum has faded, triggering a sharp technical correction from recent two-year highs.
Industry experts also noted that sliding equity markets, falling CBOT grain and oilseed prices, and a stronger dollar added intense downside pressure on cotton futures.
The USDA Export Sales report for the week ending May 14 showed that US net Upland cotton export sales surged to 131,792 bales for the current marketing year. Export sales rose sharply by 176 per cent from the previous week, driven by steady demand, while net sales for the 2026–27 marketing year stood strong at 215,962 bales.
Lower domestic benchmarks followed the global plunge, with India’s Gujcot S-6 spot price shedding ₹650 to close at ₹65,400 per candy (86.71 cents/lb), causing the Indian basis premium over ICE July to widen dramatically to 873 points.
Traders also monitored Asian markets, where the China Cotton Index fell 63 yuan to 17,611 yuan per ton, while ZCE July and September cotton futures both declined by 15 yuan to close at 15,890 and 16,065 yuan per ton, respectively. Market participants remained cautious as ZCE cotton yarn bucked the trend, gaining 55 yuan to reach 22,105 yuan per ton, while ZCE Polyester Staple Fibre fell 14 yuan to 7,980 yuan per ton and viscose remained unchanged at 14,100 yuan per ton.
ICE certified cotton stocks and MCX S-6 May futures data reflected a market adjusting rapidly to international pressure.
Overall, the market tone remained highly bearish due to accelerating crop progress, favourable weather, weakness in broader markets, and aggressive technical liquidation.
This morning (Indian Standard Time), ICE July 2026 cotton traded at 78.54 cents per pound (up 0.56 cent), while cash cotton stood at 74.98 cents (down 3.62 cents). The October 2026 contract traded at 79.24 cents (down 3.34 cents), the December 2026 contract at 80.26 cents (up 0.53 cent), the March 2027 contract at 81.07 cents (up 0.49 cent), and the May 2027 contract at 81.65 cents (up 0.51 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.
Fibre2Fashion News Desk (KUL)