Cotton Futures Decline as Market Faces Mounting Headwinds

Cotton futures retreated significantly on Friday as multiple factors weighed on prices. The near-term contracts proved particularly vulnerable, with March contracts sliding 34 points while May contracts fell 51 points, reflecting broader market concerns about supply and demand dynamics in the global cotton sector.

Price Retreat Across Multiple Contract Months

The pullback in cotton futures extended across the entire forward curve. July contracts dropped 48 points, suggesting that weakness permeated the market rather than being confined to nearby months. This coordinated decline coincided with strength in other commodity markets—crude oil gained $0.85 per barrel to settle at $64.57, while the US dollar index rallied $0.718 to $96.855. The stronger dollar typically pressures cotton futures and other dollar-denominated commodities, as it makes US exports less competitive on global markets.

The Adjusted World Price fell to 50.23 cents per pound, marking a decline of 76 points from the previous week. Meanwhile, the Cotlook A Index held steady at 74.15 cents on January 27, suggesting some stabilization in global benchmark pricing even as US futures weakened.

Export Weakness Signals Underlying Demand Concerns

Export data presents a more troubling picture for cotton futures markets. As of January 22, cumulative export commitments stood at 7.553 million bales, representing a 13% year-over-year decline. More concerning, current shipments trail the USDA’s export projection by 34 percentage points, sitting at just 66% of the target versus the 84% five-year average.

This export shortfall hints at softer international demand or logistics constraints that could pressure prices further. Thursday’s online auction through The Seam moved 6,183 bales at 57.51 cents per pound, providing some indication of physical market activity.

Inventory Levels Remain Steady Amid Price Pressure

Certified cotton stocks on ICE exchanges held unchanged at 8,600 bales as of January 29, offering stability in one key metric. However, with cotton futures under pressure and export flows lagging historical norms, traders remain cautious about near-term supply dynamics and their implications for future pricing direction.