The July 2026 cotton contract settled at 75.01 cents per pound, up 1.58 cents, marking its highest close since June 4. The December 2026 contract gained 0.94 cent to settle at 77.75 cents per pound, while other deferred contracts finished 33 to 97 points higher. With July First Notice Day just four trading sessions away, market activity remained heavily focused on liquidation and short covering.
ICE cotton futures rose for a fourth straight session, driven by short covering, technical buying, and a weaker US dollar.
Weather concerns across key US cotton-growing regions also supported prices.
However, declining open interest and below-average trading volumes suggest the rally remains cautious and liquidation-driven rather than backed by strong demand fundamentals.
Trade estimates suggested July open interest had fallen to around 17,500 contracts ahead of delivery-period pressures. Analysts noted that the recent rally in the July contract was largely driven by short covering rather than fresh speculative buying.
At the start of the session, total open interest stood at 307,289 contracts, down 1,095 contracts from the previous day. Open interest has now declined in seven of the past eight trading sessions, indicating that traders are liquidating positions. The combination of rising prices and falling open interest reinforced the view that the rally is primarily liquidation-driven, rather than being supported by the creation of new bullish positions.
Total trading volume reached 57,525 contracts during the session. While this was an improvement from the previous day’s 49,891 contracts, it remained well below the 2026 year-to-date average of 81,343 contracts recorded over 114 trading sessions. The relatively light trading activity suggested that market participation remained limited, indicating a lack of strong conviction behind the recent price rebound.
Analysts described current market conditions as typical early-summer doldrums, characterised by lower trading activity and subdued market participation. Cotton prices gained support primarily from weather-related concerns across key US growing regions. These included excessive rainfall in southern Texas, persistent dryness in western cotton-producing areas, and forecasts for above-normal precipitation in parts of the southeastern US cotton belt. Market participants remain uncertain about the potential impact of these weather patterns, and confidence in the outlook for the final crop is still limited.
Forecasts indicate temperatures across much of the US cotton belt are likely to remain above normal over the next two weeks, while several western growing regions are expected to receive below-average rainfall. These weather conditions could affect the development of cotton as well as other major crops, including corn, soybeans and wheat.
The US dollar index continued to hover near its lowest level since March 2022, supported by improved risk sentiment amid optimism over potential negotiations between Iran and Israel. The dollar slipped 0.14 per cent against a basket of major currencies to around 99.55 during the session. Market participants are also closely watching the upcoming US Federal Reserve policy meeting, with expectations that the central bank could begin easing monetary policy later this year if inflation continues to moderate. A weaker dollar enhances the export competitiveness of US cotton and generally lends support to commodity prices.
Meanwhile, crude oil futures fell for a third consecutive session, reaching their lowest level in nearly three months as geopolitical concerns eased following reports of reduced tensions between Iran and Israel. Lower crude oil prices reduce the production costs of polyester and other synthetic fibres, increasing competitive pressure on cotton demand. Analysts noted that sustained weakness in energy markets could weigh on cotton’s competitiveness against man-made fibres.
Despite the recent rebound in cotton futures, market participants remain cautious as open interest continues to decline and speculative participation remains limited. Technical analysts identified 77.07 cents per pound as a key support level for December futures, while major resistance is seen near 78.42 cents, the recent weekly high and an important trigger point for additional buy-stop orders. Bears are expected to defend the 78.42-cent level aggressively, given the exceptionally large December open interest estimated at around 203,000 contracts.
Overall, market sentiment reflects a quiet but steady short-covering rally rather than the start of a strong, fundamentally driven bull market.
This morning (Indian Standard Time), ICE cotton for July 2026 was traded at 75.50 cents per pound (up 0.49 cent), cash cotton at 73.53 cents (Unchanged), the October 2026 contract at 77.53 cents (Unchanged), the December 2026 at 78.13 cents (up 0.38 cent), the March 2027 contract at 79.42 cents (up 0.36 cent) and the May 2027 contract at 80.31 cents (up 0.28 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.
Fibre2Fashion News Desk (KUL)
