Cotton Futures Pare Losses Amid Trump-Modi Trade Deal Announcement
Cotton futures staged a modest recovery from steeper morning losses by midday trading on Thursday, with contracts down 14 to 18 points. The market found some footing after former President Donald Trump announced a preliminary trade agreement with India via a post on Truth Social.
The post, issued just before noon, stated that a call with Indian Prime Minister Narendra Modi resulted in the U.S. agreeing to lower tariffs on Indian goods from 25% to 18%. In return, India committed to purchasing over $500 billion worth of U.S. energy, technology, agricultural products—including cotton—coal, and other goods. India has consistently ranked among the top eight importers of U.S. cotton, making the deal potentially significant for growers.
The news provided a counterweight to otherwise bearish sentiment. Broader commodity markets remained under pressure, with crude oil futures down sharply by $3.39 to $61.82 per barrel. The U.S. Dollar Index strengthened, gaining 0.641 points to 97.500, which typically weighs on dollar-denominated commodities like cotton.
Recent market data underscored the prevailing cautious stance. Friday's Commitments of Traders report from the CFTC revealed managed money funds increased their net short position in cotton by 13,077 contracts as of January 27, bringing the total to 65,029 contracts. This suggests professional traders remain skeptical of a sustained price rally.
Physical market indicators were mixed. The daily online auction via The Seam reported sales at 56.571 cents per pound for 4,462 bales. The Cotlook A Index, a global benchmark, fell 20 points to 73.95 cents on January 30. ICE certified cotton stocks rose by 25,666 bales on the same day, reaching 34,226 bales total. The USDA's Adjusted World Price (AWP) was set at 50.23 cents per pound, down 0.76 cents from the previous week.
At midday, the most active contracts showed the following prices:
March 2026 Cotton: 63.02 cents, down 15 points.
May 2026 Cotton: 64.76 cents, down 17 points.
July 2026 Cotton: 66.41 cents, down 14 points.
Trader Reactions & Market Analysis
The announcement injects a layer of geopolitical uncertainty into the cotton market. While the scale of the proposed Indian purchases is ambitious, analysts caution that details are sparse and implementation remains uncertain. "The headline is bullish, no doubt," said Marcus Chen, a veteran softs trader at Hartwell Commodities. "But we've seen grand announcements before that took years to materialize. The market is reacting to the promise, but the proof will be in the actual export sales data over the coming months."
Other observers were more skeptical. Sarah Elwood, an independent agricultural economist, offered a sharper take: "This feels like a desperate attempt to prop up prices with vaporware. A social media post isn't a signed treaty. Until we see concrete orders and shipping schedules, this is just noise distracting from the hard realities of high stocks and managed money's massive short bet."
A more measured perspective came from Rajiv Patel, a supply chain director for a global textile firm. "If even a fraction of this deal comes to fruition, it would rebalance trade flows. India boosting imports of U.S. ag products could ease their domestic supply tightness and provide U.S. farmers a crucial new outlet. It's a potential win-win, but the devil is in the diplomatic and logistical details."
Disclosure: On the date of publication, the original author held no positions in the securities mentioned. This article is for informational purposes only and was sourced from Barchart.com.