ICE cotton prices continued their upward trajectory for the fourth session in a row, largely driven by a weaker U.S. dollar and strong U.S. export sales. The March 2025 cotton contract settled at 71.72 cents per pound, marking an increase of 0.95 cents. Earlier in the session, it reached a high of 71.99 cents, the highest price seen since November 12, 2024. Meanwhile, the December 2024 cotton contract rose by 1.55 cents, with other contracts also seeing gains of up to 0.83 cents. The rise in prices comes amid growing demand for U.S. cotton in international markets, as the weakening dollar has made cotton more affordable for overseas buyers.
Despite these gains, cotton prices have faced some downward pressure due to a drop in crude oil prices, which in turn has reduced the cost of polyester production. Polyester, a synthetic fiber, competes with cotton, and the cheaper cost of polyester has limited the upward momentum of cotton prices. On November 25, crude oil prices fell by more than $1 per barrel, which contributed to the more affordable production of polyester fibers, a key factor in capping the gains in the cotton market.
As of late November, U.S. cotton harvesting was progressing at a solid pace, with 84% of the cotton crop harvested, surpassing the five-year average. This suggests a strong harvest, which could provide a stable supply to meet growing global demand. Additionally, on November 25, trading volume in ICE cotton was reported at 49,810 contracts, indicating robust market activity.
The recent price increase reflects the current market dynamics, where the weaker dollar and strong export sales are offsetting some of the pressures caused by cheaper polyester. While crude oil prices have dampened some of the gains in cotton, the overall trend remains positive as demand for cotton continues to rise globally.
