ICE Cotton Prices Bounce Back Amid Weaker Dollar and Strong Export Demand

ICE cotton prices saw a notable recovery, driven by a softer US dollar and robust export sales. The US dollar index, which had reached a four-month high, eased slightly, providing support for cotton prices on the Intercontinental Exchange (ICE). Additionally, the USDA’s latest weekly sales report showed a solid increase in cotton export sales, further boosting sentiment.

Yesterday, the ICE cotton December contract closed at 71.05 cents per pound, gaining 1.36 cents. This recovery came after the contract recently hit its lowest level since September 11.

Dollar Softens Following Fed Rate Cut

The recent drop in the dollar index followed a 25-basis point rate cut by the Federal Reserve. While Fed Chair Jerome Powell did not signal a definitive end to rate hikes, the lack of strong guidance led traders to take profits, putting pressure on the dollar. A weaker dollar is advantageous for US cotton as it makes American exports more attractive to foreign buyers. This shift in currency value has been a welcome change for US cotton exporters facing challenging conditions in recent months.

The easing dollar also lifted other US commodities, including corn and soybeans, which reached a one-month high due to strong export demand. These gains further bolstered market sentiment, supporting the rebound in cotton prices.

USDA Reports Strong Export Sales Amid Harvest Season Challenges

According to the USDA’s export sales report, as of October 31, US cotton export sales rose by 229,000 bales for the current marketing year—a 21% increase from the previous week and a 51% jump compared to the four-week average. This uptick highlights a favorable export environment, benefiting from the weaker dollar.

Looking ahead, traders are focused on the USDA’s upcoming Global Agricultural Supply and Demand Estimates (WASDE) report, which could provide fresh insights into global supply and demand dynamics.
The seasonal period for increased sales has begun, yet some challenges loom for US cotton farms. Many farms, particularly those relying on rainfall, need the first freeze to begin harvesting. Given strong sales from August to October, supply concerns may intensify if the weather doesn’t cooperate.

As of now, the December 2024 ICE cotton contract trades at 71.00 cents per pound, slightly lower by 0.05 cents. Cash cotton prices sit at 66.80 cents, up by 1.36 cents, while the March 2025 contract is at 73.36 cents. Other contracts, including those for May, July, and October 2025, showed minor fluctuations as traders await further market-moving news.

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