Intercontinental Exchange (ICE) cotton futures fell for a second straight session on Monday, with the benchmark contract ending 1.8 percent lower at a 19-month low, as falling demand makes U.S. cotton more expensive for overseas buyers.

At the close, cotton futures fell 1.30 cents to 2.03 cents, with July 2024 cotton ending 2.03 cents lower at 71.81 cents a pound. December cotton, the new crop, fell 1.30 cents to 71.59 cents a pound. March cotton settled 1.40 cents lower at 73.24 cents a pound.

The actively traded cotton for December has traded in a range of 71.27 cents to 73.30 cents. The contract closed at its lowest level since Oct. 31, 2022.

Since cotton hit 103.8 cents/pound since September 2022 on February 28, speculative funds have aggressively closed positions, resulting in a downward swing in cotton.

Cotton prices rose on the strength of the dollar

On Monday, the dollar exchange rate index rose 0.3 percent, making cotton more expensive for overseas buyers.

Judging by last week's export sales, there was little or no demand. The U.S. Department of Agriculture's weekly report on export sales showed 157,000 bales of cotton were exported last week, down 9% from the previous week and down 27% from the four-week average.

Brown added that unless a slew of data released this week can offset last week's strong jobs numbers, the market will assume that the Federal Reserve will not cut interest rates this year, which will keep the dollar strong and hurt the attractiveness of cotton exports.

Wall Street stocks fell on Monday as sentiment soured as cautious investors shunned risky assets ahead of this week's key inflation data and Federal Reserve meeting.

Market participants are now awaiting the USDA's monthly report on supply and demand on Wednesday.

On Friday, the U.S. Commodity Futures Trading Commission (CFTC) said speculative funds were net buyers in the futures cotton market last week, marking the 12th net seller in 13 weeks. As of June 4, speculative funds held 23,908 lots of net short orders in the cotton futures and options market, up 11,143 lots from a week earlier, when they bought 10,607 lots.

Cotton is down about 9.69 percent year-to-date. The previous two consecutive years of cotton declines, including a 2.8% drop in 2023 and a drop of more than 25% in 2022, reflected the worrying demand outlook.

On Monday, December cotton traded 29,011 lots, compared with 22,791 lots in the previous session; Short order volume was 122,794 lots compared to 118,704 lots on the previous trading day.

Source: Global Textile Network