ICE cotton ticks higher on crude oil rally

ICE cotton futures closed marginally higher yesterday. Stronger soybean prices and rising crude oil supported cotton. Higher crude oil prices make polyester, a man-made alternative to cotton, more expensive. However, traders remained cautious ahead of key data releases and the first notice day of the March 2026 contract.

The most actively traded May cotton contract rose 0.38 cent to settle at 64.14 cents per pound. All cotton contracts closed higher for the first time since January 27, posting gains ranging from 1 to 38 points.

ICE cotton futures closed marginally higher, supported by stronger soybean and crude oil prices, which reduced polyester’s cost competitiveness.
May contract settled at 64.14 cents per pound.
Trading volumes eased, while open interest declined for a ninth session.
USDA projections indicate a tighter 2026–27 global balance, with lower output, higher consumption and reduced ending stocks.

Crude oil climbed around 2 per cent to a six-month high amid tensions in the Middle East. Stronger crude prices could reduce polyester’s relative cost competitiveness, potentially offering marginal support to cotton demand.

Total trading volume was 66,490 contracts, the lightest since January 29. Cleared volume from the previous session stood at 79,290 contracts.

Global cotton markets are expected to tighten in the 2026–27 season, with production projected to decline while consumption rises, shifting the balance towards a deficit, according to projections presented at the USDA’s 102^nd Agricultural Outlook Forum. World cotton production is forecast to fall by about 3 per cent to 116.0 million bales, while consumption is expected to increase to 120.1 million bales. As a result, global ending stocks are projected to decline to 71.2 million bales under the new outlook scenario.

For the US, the outlook indicates planted area of 9.4 million acres and production of 13.6 million bales. Exports are projected at 12.2 million bales, with ending stocks estimated at 4.2 million bales.

In futures market activity, liquidation in the March 2026 contract continued ahead of the first notice day, with trading volume reaching 15,340 contracts and exceeding the open interest of 14,053 contracts, signalling active position exits and rollovers. Certified cotton stocks increased for the 13th consecutive reporting period to 117,075 bales, up by 2,565 bales, with no bales currently awaiting review.

Overall open interest declined for the ninth straight session, falling by 10,187 contracts to 328,448, extending a cumulative nine-session drop of 57,970 contracts following a prolonged earlier build-up. In contrast, open interest in the May contract rose for the 20^th consecutive session to 173,427 contracts, ahead of its first notice day scheduled for April 24.

Market participation is also expected to broaden as China’s Zhengzhou Commodity Exchange cotton futures resume trading on February 24 after the Lunar New Year holiday. Analysts indicated that cotton prices are currently trading sideways as investors roll positions and await end-March US planting intentions data, with much of the bearish news already reflected in prices.

Among related commodities, soybean prices extended gains for a third consecutive session, hovering near three-month highs.

This morning (Indian Standard Time), ICE cotton for May 2026 was trading at 64.32 cents per pound (up 0.18 cent), cash cotton at 62.14 cents (up 0.38 cent), the March 2026 contract at 62.12 cents (up 0.19 cent), the July 2026 contract at 65.92 cents (up 0.19 cent), the October 2026 contract at 67.53 cents (up 0.22 cent), and the December 2026 contract at 68.37 cents (up 0.10 cent). A few contracts remained at their previous closing levels, with no trades recorded so far today.

Fibre2Fashion News Desk (KUL)