ICE cotton futures extended gains for a second consecutive session, with the December 2026 contract settling 1.90 per cent higher at 80.42 cents per pound.
Stronger crude oil prices, successful Chinese state cotton reserve auctions and delayed cotton planting in India supported prices.
However, the rally came on the lightest trading volume of 2026, indicating mainly short covering.
Cotton was supported by stronger crude oil prices, continued optimism surrounding China’s state reserve cotton auctions, and ongoing concerns about weather-related production risks in India. This marked the first time since July 1, that the entire ICE cotton board posted back-to-back higher closes.
Crude oil prices climbed about 2 per cent, reaching a five-month high, after tensions between the United States and Iran escalated further and attacks on commercial shipping in the Red Sea increased concerns over global energy supplies. Higher crude prices raise the production cost of polyester fibre, improving cotton’s competitiveness against synthetic fibres.
Trading volume fell to just 28,096 contracts, the lightest trading session of 2026 and the lowest since Christmas Eve, compared with 32,026 contracts in the previous session. The strong price gain on very light volume suggests much of the rally was driven by short covering rather than aggressive new buying.
China’s second state cotton reserve auction again recorded 100 per cent sales, with 8,045 tonnes sold. Around 85 per cent of the cotton offered was of US and Brazilian origin, with the remainder from Xinjiang, like the first auction. The consecutive sell-outs reinforced expectations of steady mill demand, although traders noted that the auctions remain too small to significantly alter the overall supply outlook.
Market analysts said cotton was supported mainly by higher crude oil prices, continued geopolitical uncertainty in the Middle East, and the successful Chinese reserve auctions, which highlighted underlying demand.
Analysts said India’s monsoon rainfall remains below normal, with cotton planting estimated to be about 23 per cent behind last year’s pace. The delayed sowing has raised concerns over India’s production potential, providing additional support to global cotton prices.
China’s Zhengzhou Commodity Exchange (ZCE) cotton futures eased slightly after the previous session’s sharp rally. Traders noted there is still no consistent short-term correlation between ZCE and ICE price movements.
ICE certified cotton stocks declined further to 97,800 bales as of July 20, down from 98,838 bales previously, reflecting the continued tightening of deliverable US cotton supplies.
Overall, cotton benefited from higher energy prices, weather concerns and continued Chinese reserve buying, but the exceptionally light trading volume suggests the rebound still lacks strong confirmation. Traders will continue to watch US export demand, weather developments in key producing regions, and upcoming Chinese reserve auctions to determine whether the recovery can be sustained.
This morning (Indian Standard Time), ICE cotton for December 2026 was traded at 79.99 cents per pound (down 0.43 cent), cash cotton at 75.21 cents (up 1.59 cent), the October 2026 at 78.96 cents (up 1.59 cent), the March 2027 contract at 81.38 cents (down 0.36 cent), the May 2027 contract at 82.28 cents (down 0.35 cent), and the July 2027 contract at 82.03 cents (down 0.23 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.
Fibre2Fashion News Desk (KUL)
