Cotton Futures Experience Decline Amid Strong Dollar and Fed Rate Cut
The ICE December 2025 cotton contract settled at 66.90 cents per pound, down 0.35 cents or 0.52%, marking a total loss of 78 points over two sessions. Trading volume decreased slightly to 36,204 contracts. The U.S. dollar rose by 0.6%, making dollar-denominated commodities more expensive for foreign buyers. Although USDA reported a net increase in export sales, overall demand remains weak. In related markets, soybean futures also declined due to falling soyoil prices. Meanwhile, U.S. equities reached all-time highs.
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The cotton market faced notable pressure as the ICE December 2025 contract settled at 66.90 cents per pound, reflecting a decrease of 0.35 cents, or 0.52%. Over the past two sessions, the contract has lost a total of 78 points, signaling a troubling trend for investors. Trading volume also saw a decline, with 36,204 contracts exchanged compared to 38,237 in the previous session.
As of September 17, the stock levels for ICE deliverable No. 2 cotton remained unchanged at 15,474 bags. The recent uptick in the U.S. dollar, rising by 0.6% and marking its second consecutive close higher, presents an additional challenge for cotton prices. A stronger dollar makes cotton more expensive for international buyers, effectively dampening demand.
Adding to the market's woes, crude oil futures also saw a decline of 0.59% on the day of the Federal Reserve's anticipated 25 basis point rate cut. While this monetary policy shift is expected to stimulate some sectors, it has added further strain to cotton prices.
The USDA's weekly export sales report indicated a net increase of 186,100 bales for the week ending September 11, which was 44% higher than the previous week and 13% above the four-week average. However, despite this seemingly positive data, overall export demand remains lackluster, as shipments fell short of targets.
In the grain markets, CBOT soybean futures declined for the second consecutive day, pressured by weaker soyoil prices and uncertainties surrounding the EPA’s biofuel blending obligations. Analysts suggest that both grain market weakness and the robust U.S. dollar are contributing to cotton’s downward trajectory.
Despite these challenges in the commodities sector, U.S. equities saw an upward trend, with all three major indices achieving new all-time highs, both intraday and at close. Currently, the December 2025 cotton contract trades slightly lower at 66.83 cents per pound, while cash cotton stands at 64.90 cents. October 2025 and March 2026 contracts reflect minimal changes, with only a few remaining at previous closing levels, indicating a notably quiet trading day.
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