ICE cotton futures pushed higher on Monday, climbing just over 3% to trade at levels not seen in more than three months. The May contract gained 2.06 cents, or 3.1%, to 67.91 cents per pound at 10:13 a.m. ET, marking the strongest close since November 4.
Market participants pointed to a softer U.S. dollar as a key technical tailwind. The U.S. dollar index slipped 0.4% against a basket of currencies, easing the cost of dollar-denominated cotton for overseas buyers and improving international demand dynamics.
Keith Brown, principal cotton broker at Keith Brown and Co in Georgia, highlighted both currency movements and signs of Chinese interest in U.S. farm goods. "The dollar is weaker and China has expressed interest in buying U.S. agricultural products beyond corn and beans though they didn’t lift cotton specifically, but that’s what they’re implying," he said. The broker also noted a shift in speculative positioning: money managers are "starting to make their move and paring their positions down," which he said is helping support prices.
Data from the U.S. Commodity Futures Trading Commission showed that hedge funds trimmed their net short exposure to ICE cotton futures for a third straight week. Net short positions fell by 9,793 contracts to 33,488 in the week to March 10, a move that reflects a reduction in bearish bets and has provided additional upward pressure on futures.
Diplomatic outreach also featured among the factors traders were watching. Top U.S. and Chinese economic officials held talks in Paris on Sunday; two sources familiar with the discussions described the conversations as "remarkably stable." Market participants interpreted the dialogue as opening broader agricultural engagement, though no specific cotton commitments were cited.
External cost pressures reinforced the market's gains. Oil prices remained elevated amid attacks on Gulf energy infrastructure and the effective closure of the key Strait of Hormuz shipping route. Higher crude supports the cost of polyester, which is a synthetic substitute for cotton, and that linkage provided an additional price floor for cotton futures.
Taken together, the combination of a weaker dollar, reduced speculative shorting, diplomatic signals on agriculture and firmer crude prices converged to lift cotton to a three-month high. Traders will continue to watch positioning reports, currency moves and developments in energy flows for guidance on near-term momentum.