ICE cotton prices have surged, buoyed by strong demand from China, short-covering activities, and rising crude oil prices. However, the gains were somewhat restricted by a stronger dollar, which made cotton more expensive for international buyers. The March 2025 contract finished at 70.77 cents per pound, marking an increase of 0.34 cents. This week’s growth reached 2.7 percent, the most significant weekly rise since September.
As the market heads into the holiday season, trading volume has declined, contributing to the dynamics at play. China emerged as a major player, with 21,400 tons of US cotton exports attributed to its robust demand. Supporting the upward trend in ICE cotton prices was a spike in crude oil, which surged 6 percent this week due to ongoing developments in Russia and Ukraine. The price increase in crude oil is also making polyester more expensive, adding more layers to the market’s complexity.
On the other hand, the dollar index has climbed to a 13-month peak, which has capped the gains in cotton as higher dollar values result in increased costs for overseas purchasers. Interestingly, yesterday’s trading saw the March 2025 contract settling at 70.77 cents per pound, up 0.34 cents, with cash cotton also reflecting similar gains. Other contracts, including the December 2024 and May 2025, exhibited upward movements as well.
As traders look towards the coming months, the market shows signs of a shift into a lighter trading phase, with analysts noting that record short positions fueled the recent rebound, as market participants covered those positions. In summary, while ICE cotton has benefitted from demand and other factors, external variables like the dollar’s strength and global crude oil prices continue to play a significant role in shaping the market landscape.
