Analysts commonly view strong export figures as a sign of healthy downstream demand. Historical data available on the USDA Foreign Agricultural Service website (fas.usda.gov) indicate that weekly totals above 400,000 running bales are unusual and typically occur during periods of active global restocking.
Speculative Positions Deepen Net Short
The latest Commitment of Traders report offered another perspective on market sentiment. Managed-money traders increased their net short exposure by 1,580 contracts in the week to Tuesday, expanding the category’s bearish stance to 51,952 contracts. A growing net short can pressure futures if speculators continue to sell into weakness; equally, it can create fuel for rallies should a shift in sentiment force short covering.
Commercial participants, which include merchants and textile mills, often take the opposite side of speculative flows. Their aggregate long position rose marginally during the same period, suggesting that end-users may view current price levels as favorable for forward coverage.
Domestic Supply Indicators
On the supply side, the National Agricultural Statistics Service reported that 732,950 running bales were ginned between 1 January and 15 January, taking cumulative ginnings for the season to 12.695 million running bales. The figures point to steady progress in clearing the 2025/26 crop, although final production numbers will depend on the pace of late-season processing and any potential quality issues.
The supply chain snapshot was rounded out by warehouse statistics. Certified stocks monitored by ICE Futures U.S. remained unchanged at 10,422 bales on 22 January. The unchanged level suggests limited incentive to deliver cotton against futures at prevailing price differentials. Meanwhile, The Seam’s online auction platform reported sales averaging 62.43 cents per pound on 16,726 bales during Thursday’s session.
Global Reference Prices Remain Stable
International benchmarks posted little movement. The Cotlook A Index held at 74.55 cents per pound on 22 January, indicating that spot quotations for upland cotton in the Far East were steady. The U.S. Adjusted World Price, calculated weekly by the USDA to determine marketing loan repayment rates, was lowered by 18 points to 50.99 cents per pound. A lower adjusted price can improve competitiveness for U.S. exports but also impacts producer loan calculations.
Influence of Energy and Currency Markets
While cotton’s own fundamentals dominated the week, outside markets provided additional context. The rise in crude oil prices is generally supportive of synthetic fiber costs, potentially enhancing cotton’s relative value to polyester. Conversely, the drop in the dollar index theoretically boosts U.S. export prospects by making American goods less expensive in foreign currency terms. Nonetheless, futures failed to capitalize on either influence in Friday’s settlement.
Market watchers will monitor whether the alignment of higher crude values, a softer dollar and vigorous export demand can offset the prevailing speculative negativity evident in the Commitment of Traders data. Attention will also focus on any shift in certified stock levels, as an influx of deliverable cotton into ICE warehouses could exert additional downward pressure on futures.
Looking Ahead
Traders enter the new week with several reference points: a March contract near the lower end of its two-month range, historically strong overseas sales, and a managed-money community positioned heavily on the short side. Upcoming releases include weekly export sales, updated ginning progress and fresh Cotlook A Index quotations, each capable of adjusting price expectations.
For now, the market remains caught between evidence of solid demand and persistent speculative selling. Until one of those forces gains clear dominance, price action may continue to reflect a tug of war that keeps cotton confined to a relatively narrow band.
Crédito da imagem: Jeff Hutcheson via Unsplash
