ICE cotton futures hit five-month low as strong dollar damps demand

ICE cotton futures fell over 1 per cent to a five-month low, weighed down by a stronger US dollar and reduced demand from overseas buyers, especially China. The March 2025 contract settled at 66.60 cents per pound, down 1.04 cents, marking the weakest level since August 2024.

A robust dollar made US cotton less competitive globally, curbing purchases from key importers like China. Strong US retail sales data strengthened expectations of the Federal Reserve maintaining a cautious stance on interest rate cuts, further strengthening the dollar and pressuring cotton prices.

Falling crude oil prices added to the bearish sentiment, as cheaper polyester intensified competition with cotton in the textile sector. The USDA's weekly export sales report showed US cotton exports rose 17 per cent to 224,800 bales, but shipments to China were modest at 25,000 bales.

Current trading indicates slight recovery: March 2025 is at 67.02 cents per pound, up 0.29 cent, while cash cotton dipped to 64.23 cents. Other contracts showed mixed movements, reflecting market uncertainty. Weak demand from China, coupled with competition from synthetic fibers, continues to weigh on prices despite stable ICE inventory levels at 218 deliverable bales.