ICE cotton prices experienced an uptick, driven primarily by robust demand from China, as well as short covering and an increase in crude oil prices. However, the gains were somewhat limited due to a stronger US dollar which made cotton more expensive for international buyers. The March 2025 contract settled at 70.77 cents per pound, reflecting a rise of 0.34 cents. This week marked a significant turnaround with a weekly gain of 2.7 percent, the most substantial increase since September.
As the market shifts into holiday mode, trading volumes have diminished. China took the lead with 21,400 tons of US cotton exports, signaling a notable upturn in demand. The overall market dynamics saw the dollar index reach a 13-month peak, which capped the potential of cotton prices since a stronger dollar results in higher purchase costs for foreign buyers. Meanwhile, crude oil prices saw an increase of 6 percent this week, following new developments regarding the situations in Russia and Ukraine.
In terms of trading activity, the volume dipped to 29,105 contracts, the lowest figure in seven weeks, compared to the 34,339 contracts recorded the previous day. Analysts suggest that record short positions in the market contributed to the recovery, as traders began covering these positions.
For the upcoming market year, export sales saw an uptick of 16,000 bales. The current figures show that the March 2025 contracts were settled at 70.77 cents per pound, with cash cotton also climbing to 66.77 cents. Additionally, the December 2024 contract ended at 71.65 cents per pound, up by 2.46 cents, while the May 2025 contract finished at 71.89 cents, up 0.24 cents. The July 2025 contract closed at 73.00 cents, gaining 0.20 cents, and the October 2025 contract settled at 71.65 cents, up 0.11 cents.
As the cotton market undergoes these transitions, the interplay between demand, dollar strength, and crude oil prices remains critical for future movements.
