ICE cotton prices are on the rise, driven by robust demand from China, a short-covering rally, and the uptick in crude oil costs. However, the gains experienced are somewhat restrained by a stronger dollar, which has made purchasing cotton more expensive for international buyers. The latest figures show that the March 2025 contract settled at 70.77 cents per pound, marking an increase of 0.34 cents. This week’s weekly gain reached 2.7 percent—the most significant increase since September.
As the market transitions into the holiday season, trading volumes have notably decreased. In fact, trading activity is down as market participants prepare for lighter trading days ahead. China has emerged as a leader in US cotton exports, accounting for 21,400 tons. Analysts suggest that the current market rebound can be attributed to record short positions being covered by traders, reflecting a bullish sentiment despite the dollar’s strength, which peaked at a 13-month high.
Crude oil prices also surged by 6 percent this week, influenced by developments in Russia and Ukraine, further adding to support for US cotton as oil prices are directly linked to manufacturing costs, particularly affecting polyester, which has become pricier as well.
In terms of specific contract performances, cash cotton was settled at 66.77 cents (up 0.34 cents), while the December 2024 contract reached 71.65 cents (up 2.46 cents). The gains continued with the May 2025 contract settling at 71.89 cents (up 0.24 cents), the July 2025 contract at 73.00 cents (up 0.20 cents), and the October 2025 contract at 71.65 cents (up 0.11 cents).
The overall outlook remains cautiously optimistic, with analysts closely monitoring the interplay of demand from China and fluctuations in the dollar’s value as they assess future market movements.
