Cotton futures mixed as dollar strength and crude oil slump weigh on prices
Front-month contracts declined as managed money exited positions, though shipments reached a three-week high amid geopolitical uncertainty.
Cotton futures closed with mixed results on Friday, reflecting a complex interplay of currency strength, energy market volatility, and shifting institutional sentiment. Front-month contracts fell between 10 and 62 points, while deferred contracts posted gains of 6 to 26 points. The US dollar index settled at $98.925, down $0.044, while crude oil prices dropped $1.14 per barrel, adding downward pressure to the commodity complex.
Market participants appeared to be reducing exposure ahead of the weekend, influenced by broader geopolitical developments including the President’s review of a proposed agreement between the US and Iran. Commitment of Traders data revealed that managed money investors cut their net long positions in cotton futures and options by 7,845 contracts as of Tuesday, bringing the total net long position to 54,200 contracts.
Despite the bearish positioning, underlying demand indicators remained resilient. The US Department of Agriculture reported that export sales for the week ending 21 May totalled 153,622 bales for the 2025/26 season, marking a four-week high. Vietnam and Pakistan emerged as the top buyers, purchasing 48,800 and 41,300 bales respectively, with China taking 24,900 bales.
New crop sales accounted for 112,041 bales of that total, a decrease from the previous week. Pakistan was the primary purchaser of new crop cotton with 68,300 bales, followed by Mexico at 26,100 bales. Physical shipments also showed strength, reaching a three-week high of 317,706 bales, with Vietnam receiving 101,600 bales and Pakistan 70,900 bales.
Benchmark indices mirrored the mixed trading environment. The Cotlook A Index fell 125 points to 86.10 cents, while the Adjusted World Price dropped 519 points to 63.49 cents per pound. On the exchange, July 2026 contracts closed at 76.15, down 62 points, while December 2026 settled at 79.59, up 6 points, and March 2027 closed at 80.72, up 13 points.
Inventory levels saw a marginal increase, with ICE certified cotton stocks rising by 257 bales on Wednesday to reach a total of 225,516 bales. The week’s performance highlighted the divergence between speculative positioning and physical trade flows, with July contracts down 127 points for the week while December contracts gained 26 points.
