76.97 cents per pound—that was the settlement price for the December ICE cotton futures contract on June 25, up 0.71 cents or 0.93% from the previous session. Earlier in the day, the contract had dipped to 76.09 cents, its lowest since June 11. The rebound was fueled by a weaker dollar and dip-buying, with rising oil prices adding a tailwind.
Dollar and Oil: Two Short-Term Trading Drivers
The U.S. dollar index ended a three-day winning streak on June 25, after a batch of economic data—including inflation figures—weakened expectations for a Fed rate hike this year. A softer dollar makes dollar-denominated cotton more affordable for overseas buyers, a marginal positive amid sluggish global textile demand.
Oil prices surged over 2% on the same day, triggered by an attack on a cargo vessel near Oman that reignited concerns about the timeline for restoring Middle East oil supplies. The International Maritime Organization even suspended evacuation operations in the Strait of Hormuz. Higher oil prices boost cotton's competitiveness relative to polyester, a crude oil derivative.
Technicals and Fund Flow: Buyers Step in Around 76 Cents
StoneX senior vice president Bailey McHenry noted that after a sharp sell-off the previous day, the market saw technical repositioning, especially by speculative funds. He emphasized strong support at current levels, with buyers willing to step in. The 76-cent level appears to be a near-term floor, suggesting the market broadly accepts current valuations.
However, the sustainability of this dip-buying depends on follow-through from fundamentals. If the dollar strengthens again or oil retreats, cotton prices could come under renewed pressure.
Export Data: Sharp Drop but Needs Context
USDA's weekly export sales report for the week ending June 18 showed net sales of 83,864 bales for the current crop year, down 53% from the prior week and 61% below the four-week average. New crop sales added 67,089 bales, bringing the combined total to about 151,000 bales. Shipments reached 300,155 bales, up 20% week-on-week but still 16% below the four-week average.
Single-week volatility is common in cotton exports, especially in late June when the marketing year transitions. More important are cumulative sales relative to the annual target and the outlook for Chinese buying—shipments to China stood at 12,248 bales, a normal but subdued level.
Cash Market: Cotlook A Index Slides
On the cash side, the Cotlook A Index fell 250 points to 85.05 cents per pound on June 25. The futures-cash spread has narrowed, but cash remains above futures, indicating limited acceptance of current prices by the physical market. For textile mills, the buying window will depend on basis movements and downstream order recovery.