ICE Cotton Update
Posted : January 25, 2022

ICE Cotton Update

ICE Cotton slips to near 1 – week low on dollar strength, risk – off mood

ICE cotton futures fell to a near one-week low on Monday, hurt by a stronger dollar and a sell-off in equity markets due to rising tension between Russia and the West over Ukraine.

The March contract on ICE futures was down 1.30 cents, or 1.1%, at 119.45 cents per lb, by 12:08 p.m. ET. It traded within a range of 119.3 and 122.5 cents a lb.

"There is selling pressure that we're seeing on the stock markets and just across the board here. All around markets are just a little bit spooked today. Strengthening dollar is also weighing on cotton prices," said Bailey Thomen, cotton risk management associate at StoneX Group.

"However, we are still seeing pretty solid demand for U.S. cotton even at these current levels."
The dollar rose to a two-week high against a basket of currencies, making the natural fiber more expensive for oversea buyers.

U.S. stock indexes dropped, with the S&P 500 on course to confirm a correction as the prospect of a Russian attack on Ukraine posed as a double whammy for investors already worried about aggressive policy tightening by the Federal Reserve.

Oil prices also fell on Monday. Lower oil prices make polyester, a substitute for cotton, less expensive.

Meanwhile, speculators increased net long position in cotton futures by 2,014 contracts to 76,795 in the week to Jan. 18, data from the Commodity Futures Trading Commission showed on Friday.

Total futures market volume fell by 5,689 to 22,738 lots. Data showed total open interest fell 649 to 249,854 contracts in the previous session.

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