ICE cotton futures closed higher in the first trading session after the New Year holidays, supported primarily by short covering, even as underlying market fundamentals remained bearish. Additional support came from rising crude oil prices, which increased the cost of polyester fibre, a key man-made alternative to cotton.
The most active March 2026 cotton contract settled at 64.65 cents per pound, up 0.64 cent, halting a four-session losing streak seen late last year. In the previous session, the contract had fallen to its lowest level since December 23.
Market participants said the rebound was largely technical in nature. Traders moved to cover short positions following the holiday break, triggering a short-term price bounce. Analysts cautioned, however, that the recovery is unlikely to be sustained given weak demand conditions and ample global supplies.
Higher international crude oil prices offered indirect support to cotton by pushing up polyester fibre costs, marginally improving cotton’s relative competitiveness. Still, analysts stressed that this factor alone is insufficient to offset broader bearish fundamentals.
Key concerns continue to include soft global demand, oversupply, and tariff-related pressures on US cotton exports. Data from the US Department of Agriculture (USDA) showed net US cotton export sales of 134,000 bales for the week ended December 25, down 27 per cent week on week and 31 per cent below the four-week average, reinforcing demand-side weakness.
Other agricultural markets also saw gains, with Chicago Board of Trade grain and soybean futures closing higher on the back of weather assessments and post-holiday fund repositioning.
ICE-reported deliverable No. 2 cotton stocks stood at 11,510 bales as of January 2, unchanged from December 31, indicating stable certified inventories. Meanwhile, data from the Commodity Futures Trading Commission (CFTC) showed that speculators reduced net short positions by 786 contracts, bringing total net shorts down to 51,552 contracts for the week ended December 30.
In early trade today (Indian Standard Time), ICE cotton futures were mixed to higher. The March 2026 contract was trading at 64.89 cents per pound, up 0.24 cent. Cash cotton was quoted at 62.40 cents, down 0.64 cent. The May 2026 contract rose to 66.24 cents, July 2026 to 67.49 cents, October 2026 to 67.94 cents, and December 2026 to 68.75 cents per pound. Several contracts remained unchanged, with limited trading activity reported early in the session.
Analysts expect cotton prices to remain volatile in the near term, with market direction largely dependent on export demand signals, macroeconomic trends and further positioning by speculative funds.
Source: Fibre2Fashion
(Rewritten & adapted by Indian-Apparel.com News Desk)
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