Cotton Futures Slide Amid Export Slump and Dollar Strength

Cotton futures traded lower across the board by midday Friday, shedding between 34 and 51 points, as a rallying U.S. dollar and lackluster export data weighed on sentiment. The downturn contrasted with gains in the energy complex, where crude oil futures advanced by $0.85 to $64.57 per barrel.

The U.S. Dollar Index, a key gauge for commodities priced in dollars, climbed $0.718 to 96.855, making American cotton more expensive for foreign buyers. This currency headwind compounded concerns from the latest export figures. As of January 22, total commitments for the 2023/24 season stood at 7.553 million running bales, a notable 13% drop compared to the same period last year. Analysts note this volume represents only 66% of the USDA's full-year export projection, significantly trailing the five-year average pace of 84%.

"The export numbers are the story here," said market analyst Rebecca Shaw of AgTrack Advisors. "Falling behind the typical shipment pace at this stage, especially with a strong dollar, suggests underlying demand weakness that could pressure prices further if not corrected."

Other market indicators presented a mixed picture. The Cotlook 'A' Index, a global benchmark for physical cotton prices, held steady at 74.15 cents per pound. In the spot market, The Seam's online auction reported sales at an average of 57.51 cents per pound for 6,183 bales. Meanwhile, ICE-certified cotton stocks remained unchanged at 8,600 bales. The U.S. Department of Agriculture's Adjusted World Price (AWP), used for calculating marketing loan benefits, was lowered to 50.23 cents per pound, down 76 points from the previous week.

At midday, the most active contracts showed: March 2026 cotton at 63.14 cents (down 34 points), May 2026 at 64.86 cents (down 51 points), and July 2026 at 66.53 cents (down 48 points).

Trader Reactions: A Split on Market Direction

Michael Chen, Portfolio Manager at Plains Capital: "This is a classic macro squeeze. The dollar's strength is an external pressure, but the export lag is the real domestic concern. We're watching for any policy signals or shifts in Chinese buying patterns that could provide support."

Sarah Gibson, Independent Broker: "The market feels oversold given the steady physical prices. The certified stocks are minimal, which should provide a floor. This looks more like financial market jitters than a fundamental crop crisis. I see a buying opportunity on this dip."

David Miller, Veteran Farmer from West Texas: "It's incredibly frustrating. We manage every input cost, fight the weather, and then get hammered by a number on a screen in New York and Washington's monetary policy. These prices, with the AWP falling too, are squeezing producers to the breaking point. The entire supply chain profits except the people growing the crop."

Priya Vaswani, Textile Importer: "The lower futures and steady Cotlook index create an interesting arbitrage. For physical buyers, the current environment offers some stability and potential cost advantages if the dollar weakens. The focus is on securing quality bales for Q3 delivery."

Disclosure: On the date of publication, the original author held no positions in the securities mentioned. This analysis is for informational purposes only and was adapted from source material published on Barchart.com.