ICE cotton hits 11-month high on drought concerns, demand boost

ICE cotton futures continued to rise on Monday. US cotton reached an 11-month high supported by ongoing drought concerns in key US growing regions. Stronger demand signals and weaker US dollar also supported the market, as a weaker dollar made US cotton purchase more attractive for overseas buyers.

The most traded May 2026 contract settled at 71.67 cents per pound, up 0.75 cent or 1.06 per cent. The contract marked the highest level since May 6, 2025. December 2026 contract settled at 75.75 cents with a gain of 0.77 cent. The market is showing strong momentum with third consecutive higher close and 8 gains in the last 9 sessions, indicating sustained bullish trend.

ICE cotton futures climbed to an 11-month high, supported by drought concerns in key US regions and a weaker dollar boosting export appeal.
Strong fund buying and declining certified stocks reinforced bullish sentiment.
Despite moderate export sales, demand outlook remains firm, with any price dips expected to attract active buying interest.

Total trading volume stood at 63,327 contracts, relatively lighter, suggesting controlled but firm buying interest.

A key supportive factor was the 0.2 per cent decline in the US Dollar Index, making American cotton more competitive globally and boosting export demand outlook.

Trade sentiment improved as demand conditions showed signs of recovery, even though export sales pace remained moderate but stable.

Market participants believe any price dips will attract strong buying interest, reflecting underlying strength.

Weather concerns remain critical, with drought conditions persisting in major US cotton-producing regions, especially across the southern belt, raising supply-side risks. USDA’s first Crop Progress Report for the 2026 season showed planting at 5 per cent, in line with the 5-year average and slightly ahead of last year’s 4 per cent. Early sowing has begun in Texas, Arizona, and California, indicating a normal start to the season but weather risks remain.

ICE data showed certified stocks declining to 113,241 bales, down from 114,665 bales, reflecting tightening available deliverable supplies. CFTC positioning data revealed that speculators increased net long positions by 21,606 contracts to 28,743, highlighting strong bullish participation from funds.

In related markets, crude oil prices rose 0.8 per cent, increasing polyester production costs and making cotton a more attractive alternative fibre.

US equity markets gained around 0.5 per cent, supported by optimism over possible ceasefire developments, improving overall risk sentiment. However, Chicago wheat futures declined over 1 per cent due to weak export demand, limiting broader commodity market strength. Broader market direction continues to be influenced by geopolitical tensions, inflation concerns, currency movements, and energy market volatility.

The cotton market is in a strong bullish phase, driven by improving demand outlook, weaker dollar, fund buying, and supply risks from drought and falling stocks. The trend remains firm upward, and any short-term correction is likely to be well supported by active buying interest.

This morning (Indian Standard Time), ICE cotton for May 2026 was traded at 71.67 cents per pound (unchanged), cash cotton at 69.67 cents (up 0.75 cents), the July 2026 contract at 73.94 cents (up 0.10 cent), the October 2026 contract at 75.80 cents (up 0.78 cent), the December 2026 at 75.78 cents (up 0.03 cent) and the March 2027 contract at 76.74 cents (up 0.06 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.

Fibre2Fashion News Desk (KUL)