Cotton Futures Surge Over 3%, Touch Three-Month High, Weak Dollar Provides Support

Investing.com – ICE Cotton futures rose more than 3% on Monday, reaching their highest level in over three months, supported by a weaker dollar and reduced speculative short positions.

May cotton contracts increased by 2.06 cents, or 3.1%, to $0.6791 per pound, as of 10:13 a.m. Eastern Time (10:13 p.m. Beijing time), hitting the highest level since November 4, 2024.

The dollar index fell 0.4 against a basket of currencies, making dollar-denominated cotton cheaper for overseas buyers.

Keith Brown, chief cotton broker at Keith Brown and Co. in Georgia, said, “The dollar is weakening, and China has expressed interest in purchasing U.S. agricultural products, beyond just corn and soybeans. Although they didn’t specifically mention cotton, that’s clearly what they implied.”

Two sources familiar with the matter said senior U.S. and Chinese economic officials held talks in Paris on Sunday to discuss potential cooperation in agriculture. The sources described the discussions as “very stable.”

Data released by the U.S. Commodity Futures Trading Commission on Friday showed hedge funds reduced their bearish bets on ICE cotton futures for the third consecutive week. In the week ending March 10, their net short position decreased by 9,793 contracts to 33,488 contracts.

Brown added that “fund managers are starting to take action to reduce their holdings,” which also supported prices.

Oil prices remain high due to attacks on Gulf energy infrastructure and the de facto closure of the Strait of Hormuz, a critical shipping route. Rising crude oil prices have increased the cost of polyester, a substitute for cotton, providing additional support for cotton prices.

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