DR. John R.C. Robinson / Professor and Extension Specialist for Cotton Marketing / cottonmarketing.tamu.edu
Through Friday, January 16, ICE cotton futures stepped up from the mid-64-cent level, bounced off the 65.20ish level multiple times, then gyrated back down to where they started the week (see chart above courtesy of Barchart.com). Friday’s settlement of the Mar’26 contract was 64.66 cents per pound. Chinese cotton prices were flat/mixed this week, as was the A-Index of world cotton prices.
Other ag futures markets tracked similar patterns across the week. CBOT fell hard in an apparent negative reaction to Monday’s WASDE adjustment. CBOT soybeans and KC wheat followed similar but less drastic paths. ICE WTI crude oil futures trended higher and then lower across the week. In contrast with these physical commodities, the U.S. Dollar Index started off with a small dip that launched into an uptrend for most of the week. Other macro influences (i.e., GDP, inflation, and interest rate policy) remained mixed in their expectation and implication for slow economic growth.
Cotton-focused market influences included mostly bullish adjustments to USDA’s January cotton balance sheets. USDA AMS this week reported inactive to moderate cotton trading with demand varying from very light to moderate. As of January 8, AMS also reported 83% of forecasted U.S. production being classed.
Through Thursday, January 15, cotton open interest increased across the week as it climbed to new record levels. Some of this can be explained by a large week over week increases in long hedge fund positions (+5,875 contracts), short hedge fund positions (5,422 contracts), and net long index fund positions (4,832 contracts).
The dynamics of ICE cotton futures may also represent a wet blanket on the market. It remains true that unfixed call sales (representing potential/eventual futures buying by mills) are at an historically low level, perhaps reflecting the cautionary buying on the demand side.
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.
DR. John R.C. Robinson / Professor and Extension Specialist for Cotton Marketing / cottonmarketing.tamu.edu
Link To Original Article: https://cottonmarketing.tamu.edu/