Fashion
ICE cotton rally pauses on stronger US dollar, profit booking
The most traded May 2026 contract settled at 68.70 cents per pound, down 0.07 cent. May contract has maintained a gain of 353 points despite slight fall. The contract had witnessed rally during the last five trading sessions.
ICE cotton futures paused after hitting an 8-month high, pressured by a stronger US dollar and profit booking.
The May 2026 contract settled at 68.70 cents per pound.
Rising crude oil capped losses by supporting cotton over polyester.
Lower volumes but higher open interest signalled fresh positions, while markets await the USDA report for direction.
Middle East tensions increased risks to energy supply, pushing Brent crude prices higher. Higher crude oil prices raised polyester production costs, making cotton relatively more competitive and providing indirect price support.
Market pressure was mainly due to a stronger US dollar, which recovered after the Federal Reserve kept interest rates unchanged, reversing prior weakness. The stronger dollar made US cotton more expensive for overseas buyers, weighing on demand sentiment.
Trading volume stood at 86,811 contracts, lowest in last 3 sessions, indicating lighter market participation. Open interest increased by 2,046 to 341,326 contracts, suggesting fresh positions and continued market involvement. Certified stocks unchanged at 116,789 bales as per ICE data on March 17, indicating no immediate supply pressure
Cotton rallied strongly over the past several sessions, driven largely by speculative short covering, pushing prices to multi-month highs. Current dip reflects mild profit booking and signs that short covering may be slowing or nearing completion.
Market analysts stated that the recent rally triggered significant short covering, but the future direction will depend on how speculative positions evolve next week. Mills were previously complacent with low inventories, but sudden price rise forced them to re-enter the market and cover demand.
Market participants are awaiting the next USDA export sales report for fresh direction.
This morning (Indian Standard Time), ICE cotton for May 2026 was traded at 68.13 cents per pound (down 0.57 cent), cash cotton at 67.95 cents (unchanged), the July 2026 contract at 69.95 cents (down 0.62 cent), the October 2026 contract at 71.99 cents (down 0.13 cent), the December 2026 at 72.12 cents (down 0.52 cent) and the March 2027 contract at 72.99 cents (down 0.48 cent)). A few contracts remained at their previous closing levels, with no trading recorded so far today.
Fibre2Fashion News Desk (KUL)