Early in the week ending Friday, May 16, ICE cotton futures hopped up to the weekly highs before gradually sliding to weekly and monthly lows (see chart above courtesy of Barchart.com). The Jul’25 contract settled Friday at 64.89 cents per pound, while the new crop Dec’25 settled the week at 67.67 cents per pound. Chinese cotton prices rose across the week, while the A-Index of world cotton prices declined (similarly to ICE cotton futures).
Other ag futures markets did their own thing. CBOT corn zigged higher, zagged lower, and then flattened out. CBOT soybeans climbed a hill and then came back down, while KC wheat futures shifted from a down-trend into an up-trend across the week. The U.S. dollar index did a little bit of everything: shot higher after last weekend’s U.S.-China talks, stabilized, trended lower and higher, and then flattened out. Longer term, it is still an open question whether the U.S. Dollar Index is bottoming after stair-stepping lower 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 supportive adjustments to the old crop balance sheet, and mixed new crop numbers. There were continued weekly reports of very light to moderate regional demand for U.S. cotton. The only active spot trading was in the West Texas-Kansas-Oklahoma region where there are moderate supplies left to trade. The week saw modest U.S. export net sales reports through May 8. 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.
For the week ending May 15, the day-to-day shifts in ICE cotton open interest showed steady increase. Coupled with the declining price settlements, this suggests new outright short positioning. Indeed, as of May 13, the regular weekly (Tuesday) snapshot of speculative open interest reflected short positioning in the form of 2,403 fewer (liquidated) hedge fund longs and 6,016 more hedge shorts, week over week. The index trader net long position was barely changed, week over week, expanding only 682 contracts.
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 9.
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.