Cotton Prices Climb Higher in the Early Hours of Wednesday
In the world of commodities, cotton futures have been experiencing a rollercoaster ride, with prices fluctuating significantly over the past few months.
On Wednesday, cotton price action saw a positive surge, with prices up 4 to 26 points. Mar 26 Cotton closed at 68.42, up 44 points, while Oct 25 Cotton closed at 65.59, up 103 points. The Dec 25 Cotton closed at 67.11, up 47 points.
However, it's important to note that this upward trend is occurring against the backdrop of a generally bearish trend since 2022. Prices have shown some sideways trading and consolidation in 2025, but they are still near the lows seen in April 2025 (60.8 cents) and below previous highs reached in 2022 (~$1.56 per pound).
Key recent price action and market updates include a rise in cotton futures on August 9 and 10, despite prices being down about 1.1% over the past month and roughly 3.6% lower compared to the previous year. The U.S. Department of Agriculture (USDA) weekly export report as of July 31 showed accumulated cotton exports up by 1% year-on-year, and net upland cotton sales of 109,300 running bales for the 2025/26 marketing year, suggesting stable demand fundamentals.
The July USDA World Agricultural Supply and Demand Estimates (WASDE) report forecasted increased ending cotton inventories for 2025/26 but kept the upland cotton price projection steady at 62 cents per pound, pointing to sufficient global cotton supply to meet demand. Market sentiment is cautious due to soft demand, tariff uncertainty, and broader market pressures.
Regional crop conditions are favorable, especially in key U.S. cotton-growing areas like the Delta and Southeast, supporting expectations for a strong harvest this season.
The futures market shows a bearish bias in 2025, trading within a range roughly between 64 and 71 cents, with December 2026 contracts trading just under 69 cents.
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Meanwhile, other markets saw their fair share of movement. The US dollar index was back down $0.041 to $98.545. ICE cotton stocks were steady on August 4, with the certified stocks level at 21,617 bales. The Cotlook A Index was down a penny at 77.50 cents on August 4. Crude oil futures were another $1.15/barrel lower.
In terms of crop conditions, ratings in Texas were down 8 points, while Georgia improved 8 points. The weekly Crop Progress report from NASS showed conditions unchanged at 55% good/excellent. The Brugler500 index remained steady at 345, despite some shifting.
Cotton exports excluding linters during June totaled 1.008 million bales, a 22.03% improvement from last year but down 20.02% from May.
In summary, cotton futures remain in a long-term bearish trend but have stabilised somewhat in 2025 with mixed signals from exports and supply forecasts. Prices hover in the mid-60 cent range amid cautious market sentiment influenced by tariffs and global supply outlooks.
In light of the recent positive surge in cotton prices, one might consider investing in fashion-and-beauty or food-and-drink sectors, as increased income from cotton farming could potentially lead to improvements in lifestyle. However, it's crucial to keep an eye on the overall bearish trend in cotton prices since 2022 and the forecasted increased cotton inventories for 2025/26, which might affect the long-term financial viability of such ventures.
