Cotton Starting Monday with Gains

Cotton futures traded lower, slipping 6–10 points midday with Mar-26 at 63.87c (down 6), May-26 at 64.92c (down 8) and Jul-26 at 65.95c (down 8); the Cotlook A index fell 50 points to 74.20c/lb while the USDA-adjusted world price rose to 51.28c/lb. U.S. export sales reached a marketing-year high of 292,146 RB for the week of Nov. 6 (27.6% above the same week last year) although shipments slowed to 135,898 RB; ICE certified stocks eased to 13,971 bales and a Seam auction averaged 62.51c/lb for 3,670 bales. CFTC data showed managed-money net shorts of 74,093 contracts as of Oct. 28 (a reduction of 7,152 contracts), signaling persistent bearish positioning; taken together, strong weekly sales have not yet offset broader price weakness and the market remains under downside pressure.

Analysis

Cotton futures extended recent weakness with midday losses of 6–10 points: Mar-26 at 63.87c (down 6), May-26 at 64.92c (down 8) and Jul-26 at 65.95c (down 8), while the Cotlook A index fell 50 points to 74.20c/lb. Macro and commodity context shows crude oil down $1.02 to $59.06 and the US dollar index up to 99.04, background moves that can pressure agricultural commodity demand and elevate dollar-denominated selling. The USDA/exports picture is mixed: U.S. export sales hit a marketing-year high of 292,146 RB for the week of 11/6 (27.55% above a year ago) but shipments slowed to 135,898 RB versus the prior week, suggesting a timing disconnect between bookings and physical flows. Market structure and liquidity signals remain bearish: managed-money accounts held a net short of 74,093 contracts as of 10/28 (a 7,152-contract reduction week-on-week), ICE certified stocks eased to 13,971 bales (down 1,614), and a Seam auction cleared 3,670 bales at an average 62.51c/lb. The Adjusted World Price rising to 51.28c/lb (up 51 points) contrasts with spot indices' weakness, indicating administrative price reference support that has not yet translated into higher futures. Near-term implications are continued downside pressure until shipments accelerate, certified stocks decline further, or managed-money positioning materially reverses; key near-term data to watch are weekly export shipments, subsequent sales cadence, and changes in certified stocks and Cotlook/AWP spreads.

Key Decisions for Investors

• Trim or avoid adding unhedged long cotton futures given the 6–10 point slide, persistent managed-money net-short of 74,093 contracts, and recent Cotlook A weakness
• Use tactical hedges (short futures, put options or collars) to protect existing long exposure while monitoring shipments and certified stocks for signs of physical tightening
• Monitor weekly export shipments, next export sales reports and certified stock changes closely; consider increasing exposure only if shipments accelerate and certified stocks decline or if managed-money positioning shows sustained long covering