ICE cotton futures fell on Wednesday as trading volumes remained low with many traders inactive ahead of the July 4 Independence Day holiday. After the Federal Reserve meeting, the dollar index dropped while crude oil prices remained stable. Traders took a cautious stance, awaiting the US export sales report expected on Friday.
The ICE cotton December contract closed at 72.36 cents per pound, marking a decline of 34 points. The March 2025 contract decreased by 0.34 cents, settling at 74.05 cents, according to trade analysts.
Following the Federal Reserve meeting, the US dollar index eased by 0.5%, hitting its lowest point since June 13 this year, recorded at 105.31. The Federal Reserve signaled the beginning of policy rate easing, which generally supports cotton futures by limiting their decline.
Trading volume on Wednesday was significantly low, at just 18,012 contracts, the lowest seen in 2024 thus far. This drop in volume was expected ahead of the holidays. Certified cotton stocks began the day at 53,791 bales, a decrease of 426 bales due to decertifications, with no bales awaiting review. Market participants anticipate improved trade activity next week when the WASDE report is released. Open interest increased by 1,365 contracts, reaching a total of 210,048 contracts.
Weather developments took center stage with Hurricane Beryl approaching South Texas, posing potential impacts on cotton crops. Additionally, an extensive heatwave is forecasted across the US, with extreme temperatures expected in major cotton-growing regions. Drought conditions for cotton have worsened, now affecting 19% of the area, up by 3% from last week.
On Wednesday, the December 2024 ICE cotton contract traded 0.34 cents lower, closing at 74.05 cents per pound. Cash cotton was traded at 64.85 cents, down by 0.65 cents. The July 2024 contract fell to 68.68 cents, the October contract to 70.85 cents, the March 2025 contract to 74.05 cents, and the May 2025 contract to 75.40 cents, each down by 0.34 to 0.65 cents.
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