Over the holiday-shortened week ending Friday, May 30, ICE cotton futures followed a bumpy path lower (see chart above courtesy of Barchart.com). ICE Jul’25 cotton settled Friday at 65.06 cents per pound, while new crop Dec’25 settled at 67.75 cents. Chinese cotton prices were mixed this week, as was the A-Index of world cotton prices.
Across the week ending June 6, grain and oilseed futures shifted from and early modest down trend into a longer modest uptrend. The U.S. dollar index stair-stepped lower across the week. It is still an open question whether the Dollar Index is bottoming after weakeding all spring. It is also uncertain how financial markets will react as they approach the end of the 90 day hiatus on U.S. tariffs on its trading partners. Other macro influences (i.e., GDP, inflation, and interest rate policy) remained mixed in their expectation and implication.
Cotton-focused market influences this week included continued weekly reports of very light to moderate regional demand for U.S. cotton. There were continued modest U.S. export net sales reports through May 29, although this perhaps has less demand implication. Rather, there simply may not be much old crop cotton supply left to sell. The pace of 2024/25 export shipments continued above the weekly average level needed to reach USDA’s target level of exports (11.1 million bales). Almost all of the projected U.S. old crop production has been ginned and classed since April. New crop influences included continued rainy weather over the the U.S. Cotton Belt, while the early arriving Indian monsoon stalled a bit this week.
For the week ending Thursday, May 30, the day-to-day shifts in ICE cotton open interest showed an increasing pattern. Coupled with the lower price settlements, this suggests additional shorts. This was only partially confirmed by the regular weekly (Tuesday, May 20) snapshot of speculative open interest. The latter did indeed short positioning in the form of 1,101 fewer (liquidated) hedge fund longs and 990 more hedge shorts, week over week. However, the index trader net long position actually expanded by 2,259 contracts, week over week.
The dynamics of ICE cotton futures may also represent a wet blanket on the market. It remains true that unfixed call sales (by mills) are at an historically low level, perhaps reflecting the cautionary buying on the demand side. In terms of ratios, unfixed call purchases (by suppliers) outweigh unfixed call sales by almost two-fold across all contracts, as of May 23.
For more details and data on Old Crop and New Crop fundamentals, plus other near term influences, follow these links (or the drop-down menus above) to those sub-pages.