ICE cotton futures ended higher in the first trading session after the New Year holidays. Short covering largely drove the gains, while market fundamentals remained weak. Rising crude oil prices also offered limited support by increasing polyester fibre costs.
March 2026 Contract Posts Modest Gains
The most active March 2026 cotton contract settled at 64.65 cents per pound, up 0.64 cent. The move snapped a four-session losing streak. In the previous session, prices had slipped to their lowest level since December 23.
Market participants said the rebound was technical. Traders covered short positions after the holiday pause, which led to a temporary price lift.
Weak Demand Continues to Pressure Market
Analysts cautioned that the recovery may not last. Global demand remains soft, and supply levels stay comfortable. Tariff-related challenges continue to affect US cotton exports.
According to USDA data, net US cotton export sales for the week ended December 25 stood at 134,000 bales. This marked a 27 percent decline from the previous week and a 31 percent drop from the four-week average.
Crude Oil Prices Offer Limited Support
Higher crude oil prices raised polyester fibre costs, improving cotton’s competitiveness slightly. However, analysts said this factor alone cannot offset broader bearish fundamentals in the cotton market.
Stocks and Speculative Positions Remain Stable
ICE-certified deliverable No. 2 cotton stocks remained unchanged at 11,510 bales as of January 2. Meanwhile, CFTC data showed that speculators reduced net short positions by 786 contracts. Total net shorts fell to 51,552 contracts for the week ended December 30.
Early Trade Shows Mixed Movement
In early trade today, ICE cotton futures traded mixed to higher. The March 2026 contract rose to 64.89 cents per pound. Cash cotton slipped to 62.40 cents. May, July, October and December 2026 contracts recorded marginal gains, while some contracts remained unchanged due to thin trading.
Outlook Remains Volatile
Analysts expect near-term volatility to continue. Market direction will depend on export demand signals, macroeconomic developments and further positioning by speculative funds.
