ICE Cotton Update
Posted : May 06, 2022

ICE Cotton Update

ICE Cotton futures drop as investors roll positions

ICE cotton futures fell nearly 1% on Monday as investors rolled over their positions from the front-month contract, while the focus turned to a closely watched federal monthly supply and demand report later this week.

The front-month contract on ICE futures for March was down 1.20 cents, or about 1%, at 125.54 cents per lb by 12:08 EST. It traded within a range of 125.41 and 126.94 cents a lb.

"Prices are just facing a little bit of selling pressure here. But for the most part, the market is really staying sideways ahead of the WASDE report this week," said Bailey Thomen, cotton risk management associate at StoneX Group.

"We're seeing a pretty strong volume on the March-May spread in particular, so that could be coming in from investors that are most likely rolling some of their long positions out from March into May and that could be adding a little bit of pressure on the front month."

Market participants now await the U.S. Department of Agriculture's (USDA) monthly World Agricultural and Supply Demand Estimates (WASDE) report due on Wednesday.

Last week, the USDA weekly export sales report showed net sales of 332,100 running bales of cotton for 2021/2022, up 10% from the prior four-week average. Increases were primarily for China.

The dollar index rose 0.1% against its rival after falling to a two-week low last week. A stronger greenback makes cotton more expensive for other currency holders.

Speculators raised net long positions in cotton futures by 3,693 contracts to 78,767 in the week to Feb. 1, data from the Commodity Futures Trading Commission showed on Friday.

Total futures market volume fell by 15,768 to 31,504 lots. Data showed total open interest gained 1,391 to 266,056 contracts in the previous session.

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