Cotton Falling at Midday

Cotton futures are down across most months, influenced by mixed factors including a slight increase in crude oil prices and a strengthening US dollar. US cotton planting is slightly behind the average pace, particularly in Texas and Georgia, while crop conditions remain steady with regional variations in ratings. Despite these factors, the Cotlook A Index saw a slight increase, and ICE cotton stocks rose due to new certifications.

Analysis

Cotton futures are exhibiting notable weakness, with contracts trading 51 to 67 cents lower across most delivery months, exemplified by December 2025 cotton falling 67 points to 67.68 cents/lb. This decline occurs amidst a modest $0.10/barrel increase in crude oil prices but is concurrent with a $0.129 rise in the US dollar index to $99.035, a factor that typically pressures US commodity export prices. According to the USDA, US cotton planting progress stands at 76%, trailing the 80% five-year average, with significant producing states like Texas at 72% (behind its 74% pace) and Georgia at 87% (2% behind normal). While 12% of the crop is squared, aligning with the historical average, and national crop conditions are steady at 49% good-to-excellent (Brugler500 index unchanged at 324), regional disparities exist, such as a 3-point drop in Texas ratings versus a 4-point improvement in Georgia. Despite a 25-point increase in the Cotlook A Index to 78.00 cents/lb on June 9th, other indicators signal bearish pressure: ICE certified cotton stocks rose by 1,386 bales to 53,351 bales, and the USDA’s Adjusted World Price decreased by 8 points to 53.76 cents/lb, suggesting near-term headwinds for prices.

Key Decisions for Investors

• Given the current downward pressure on cotton futures, a strengthening US dollar, and rising ICE certified stocks, investors should exercise caution with long positions and might consider strategies aligned with further near-term price declines.
• Closely monitor weekly planting progress reports and weather conditions in key cotton-growing regions, as persistent delays beyond the current lag could eventually tighten supply outlooks and offer a contrarian bullish signal.
• Evaluate the relative strength of the Cotlook A Index against declining futures and the lower Adjusted World Price, as divergences may indicate shifts in physical market demand or potential for basis adjustments.