Tue. 5th May 2026
|
Insights
|
ICE cotton futures closed lower on yesterday after hitting fresh contract highs earlier, indicating strong profit booking and resistance at higher levels. Overall, the sentiment turned weaker as market failed to sustain bullish momentum despite supportive macroeconomic cues.
The most traded contract July 2026 settled at 82.92 cents per pound, down 1.27 cent. Earlier, the contract had touched as high as 84.39 cents per pound. The price action in July contract shows clear rejection near highs, suggesting selling pressure from trade and speculative long liquidation. December 2026 contract settled at 83.68 cents, down 0.88 cent, slipped from its high of 84.85 cents.
Forward contracts mirrored similar weakness, indicating pressure not limited to nearby months but across the entire curve. Other active months declined in the range of 30 to 127 points, confirming broad-based selling across all maturities.
Total trading volume dropped to 50,775 contracts compared to 91,096 in the previous session and weekly average of 58,788 contracts. Significant drop in volume indicates reduced participation, lack of fresh buying interest and a wait-and-watch approach after recent highs. Lower volume along with falling prices reflects weakening bullish conviction and short-term exhaustion in the rally.
ICE certified stocks increased to 179,741 bales, up by 14,060 bales over the week, reaching the highest level since May 2024. Rising certified stocks signal improving deliverable supply, easing earlier tightness concerns and acting as a bearish factor for prices.
US Dollar index weakened by 0.3 per cent, which is generally supportive for cotton as it improves export competitiveness but failed to offset bearish factors.
Strength in crude oil also supported cotton indirectly via polyester price linkage, but impact remained limited due to demand concerns.
Strong US equity markets and broader commodity optimism earlier supported prices but could not sustain the rally.
Weather concerns in Texas, especially dry conditions, continue to provide underlying support to cotton prices. Despite supportive weather and macro factors, immediate pressure from supply increase and weak demand dominated market direction.
Market structure suggests resistance near 84–85 cents zone where repeated selling emerged. Short-term trend has turned weak to sideways with downside pressure unless fresh bullish triggers emerge.
This morning (Indian Standard Time), ICE cotton for July 2026 was traded at 83.29 cents per pound (up 0.37 cent), cash cotton at 80.67 cents (down 0.52 cent), the May 2026 contract at 80.58 cents (down 1.27 cent), the October 2026 contract at 84.32 cents (up 0.46 cent), the December 2026 at 83.85 cents (up 0.17 cent) and the March 2027 contract at 84.71 cents (up 0.15 cent)). A few contracts remained at their previous closing levels, with no trading recorded so far today.