ICE Cotton Prices Rebound on Market Optimism

ICE cotton prices experienced an uptick on Wednesday, bouncing back from recent yearly lows, fueled by short covering and favorable external factors. Stable US inflation data has raised the possibility of a Federal Reserve rate cut, injecting optimism into the market. Additionally, a weaker US dollar lent support to cotton prices. Despite hitting a new yearly low of 73.68 cents, the ICE July contract recovered after finding technical support.

Trade analysts reported that the US cotton July contract settled 78 points higher at 75.41 cents per pound (0.453 kg), while the December contract closed at 74.29 cents, up 15 points on Wednesday. The stability in US inflation data has brightened the prospects of a rate cut in the near future. Moreover, the dollar index eased by 0.6 percent, making cotton purchases more affordable for foreign buyers. Crude oil prices also improved after touching a two-month low, driven by bullish US economic and crude oil inventory data.

Trading volume remained relatively low in Wednesday's session, with just 27,000 lots traded, reflecting trader reluctance to establish new positions. Certified stocks in the ICE cotton exchange rose to 169,735, marking an increase of 4,470 bales. Traders are eagerly awaiting the US export sales report, scheduled for release in the evening.

On Thursday, ICE cotton July 2024 traded 0.73 cents higher at 76.14 cents per pound. Meanwhile, cash cotton was traded at 71.16 cents (up 0.78 cents), the October (new crop) contract at 75.27 cents (down 0.31 cents), the December 2024 contract at 74.81 cents (up 0.52 cents), the March 2025 contract at 76.39 cents per pound (up 0.54 cents), and the May 2025 contract at 77.61 cents (up 0.53 cents).