Cotton Market Faces Persistent Weakness as Trading Activity Heats Up

The cotton market finds itself under significant pressure as a complex mix of macroeconomic factors and supply-demand dynamics weigh on prices. Across major contract months, cotton futures have experienced notable declines, signaling caution among both physical market participants and financial traders positioning themselves for volatile trading sessions ahead.

Price Action and Futures Decline

Contract months throughout the cotton market are showing consistent losses. March cotton futures have retreated 117 points to settle at 62.64 cents per pound, while May contracts dipped 108 points to 64.4 cents. July futures, typically serving as a barometer for the broader market direction, declined 93 points and closed at 66.04 cents. These synchronized declines across multiple expiration months suggest underlying weakness rather than isolated volatility.

The broad-based pressure reflects a combination of domestic and international factors. The stronger US dollar index, up against most currency baskets, has made American cotton more expensive for foreign buyers, reducing export competitiveness. Simultaneously, crude oil futures have slumped 145 cents per barrel to trade near $60.93, a development that typically signals weakening global economic demand and reduced agricultural spending.

Export and Supply Market Challenges

One of the more concerning signals comes from official export data. USDA commitment figures show just 7.35 million round bales of cotton pledged as of mid-January—a performance that trails last year’s pace by 13 percent. More troublingly, this export volume represents only 64 percent of what USDA projects for the season, falling well short of the historical 81 percent average. These metrics suggest that buyers remain hesitant to commit to purchases at current price levels.

Recent trading activity on The Seam’s online platform reflected modest demand, with 5,645 bales moving through the auction at 57.99 cents per pound. While this data point offers limited insight into broader market sentiment, it underscores price resistance in the physical cotton market.

Inventory and Global Pricing Dynamics

From the financial trader perspective, managed money positions continue shifting bearish. Commitment of Traders reporting through mid-week showed speculative accounts adding 1,580 contracts to their net short position, bringing total bearish bets to 51,952 contracts. This accumulation of shorts suggests money managers expect further downward pressure ahead.

Global cotton market indicators have aligned with domestic weakness. The Cotlook A Index, a widely watched benchmark, dropped 50 points to 74.05 cents in recent sessions. ICE certified inventory levels also tightened slightly, declining 510 bales to 9,912 total bales available for delivery—a modest supply reduction that has done little to support prices.

The Adjusted World Price, which incorporates international supply-demand balances, has declined to 50.99 cents per pound, marking an 18-point retreat from the prior week. This global pricing pressure, combined with domestic export weakness and speculative short accumulation, indicates that cotton market participants are increasingly pessimistic about near-term demand recovery. Traders monitoring commodity flows will want to watch whether export commitments accelerate or whether the cotton market continues testing lower price support levels.