ICE Cotton Futures Decline on Profit Taking and Stronger Dollar

ICE cotton futures declined on Monday due to profit taking and consolidation after a strong rally in the last week. The decline marked the first broad-based drop since July 29, which was expected as a normal corrective session following the recent sharp price increase.

The stronger US dollar also put pressure on US cotton prices, making it less competitive in international markets. The most active December 2026 contract settled at 83.86 cents, down 0.54 cent from the previous day's close.

Despite the decline, open interest continued to rise for the sixth consecutive day, indicating fresh positions were entering the market even as prices fell. This was seen as an important signal of ongoing demand and support for cotton prices.

The USDA's August crop-condition data showed that the US cotton crop continues to deteriorate, with only 40% rated good and 10% excellent. However, this did not seem to have a significant impact on the market, which is still expected to recover due to weather-related production risks and tight supply.

India's monsoon situation remains a concern for Indian cotton production, while China's State Reserve buying continues to support nearby physical cotton prices. ICE certified stocks remain extremely tight, limiting the potential for a deep correction unless demand or weather fundamentals deteriorate significantly.