ICE cotton experienced a steep decline following indications of a strong crop in the US and Brazil. Speculative trading in response to the WASDE report and US sanctions on Chinese products also contributed to the heavy sell-off. US cotton dropped by up to 300 points in the previous trading session.

According to trade analysts, the US cotton July contract settled 300 points higher at 74.63 cents per pound (0.453 kg). The December contract settled at 74.18 cents, down 148 points on Tuesday.

ICE cotton prices plunged due to strong crop forecasts in US and Brazil, speculative trading and US sanctions on Chinese products.
The US cotton July contract settled 300 points higher, while the December contract dropped.
Speculative trading added pressure, with open interest rising over six sessions and certified stocks at 165,265 bales.

Yesterday, external factors had less impact on the market. The dollar index eased and settled below 105. Crude oil put pressure on cotton as it declined by more than 1.5 per cent.

However, a good cotton crop in the US and Brazil was the key reason for the decline. Weather conditions are favourable in US growing areas, with only 8 per cent of the crop under drought conditions. The Brazilian national agency CONAB released a cotton production report showing higher output than last year. Brazil is emerging as a major world cotton supplier, thus affecting US’ cotton markets.

Yesterday, speculators added more pressure by building their positions. The trading volume was 52,995 contracts, with 33,236 contracts cleared the previous day. Open interest has been consistently increasing for six consecutive sessions. It started at 221,251 contracts, up 3,609 contracts from the previous day, and has added 13,075 contracts over six sessions. Yesterday, certified stocks began at 165,265 bales, down 1,046 bales due to decerts. This is still a huge quantity, pressurising the buyers.

On Tuesday, ICE cotton for July 2024 was traded 0.76 cents lower at 73.87 cents per pound. Cash cotton was traded at 70.38 cents (down 3.00 cents), the October (new crop) contract at 75.58 cents (down 1.48 cents), the December 2024 contract at 73.84 cents (down 0.34 cents), the March 2025 contract at 75.36 cents per pound (down 0.34 cents), and the May 2025 contract at 76.59 cents (down 0.34 cents).

Fibre2Fashion News Desk (KUL)

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