Cotton Trading with Slight Thursday Midday Losses

Cotton futures slid 7–12 points across front months midday Thursday (Mar 64, May 65.08, Jul 66.09) while crude fell $1.15 to $57.32 and the dollar eased to 98.200. USDA weekly export data showed bookings of 187,648 RB—down year‑over‑year—and shipments were the second‑lowest this marketing year at 113,219 RB, even as September exports rose 17.2% y/y to 592,176 bales (but fell 7.9% month‑over‑month). Physical market indicators were mixed-to-firm: The Cotlook A Index climbed 25 points to 73.95¢/lb, the Adjusted World Price jumped to 51.28¢/lb, ICE certified stocks held at 13,971 bales, and an online auction averaged 60.52¢/lb. Taken together, the market is reacting to weaker export demand and low shipments that are pressuring futures in the short term, despite firmer physical price signals that suggest some underlying supply tightness.

Analysis

Cotton futures weakened midday Thursday, falling 7–12 points across front months with Mar 26 at 64 (-12), May 26 at 65.08 (-9) and Jul 26 at 66.09 (-7); crude oil declined $1.15 to $57.32 and the U.S. dollar index eased 0.568 to 98.200. Weekly export sales for the week of 11/13 showed bookings of 187,648 RB—down year‑over‑year—and shipments of 113,219 RB were the second‑lowest this marketing year, while September exports totaled 592,176 bales (up 17.16% y/y but down 7.88% m/m).

Physical-market indicators are firmer: the Cotlook A Index rose 25 points to 73.95 cents/lb on 12/10, the Adjusted World Price jumped to 51.28 cents/lb (up 51 points), an online auction averaged 60.52 cents/lb and ICE certified stocks held steady at 13,971 bales. The price disconnect—soft futures on weak bookings/shipments versus firm physical price metrics—implies short‑term bearish sentiment driven by demand flow, with underlying supply tightness that could cap downside.

Implications for positioning include heightened near‑term volatility and dependence on forthcoming weekly export flows and physical price data; a sustained deterioration in bookings or further weak shipments would likely push futures lower, whereas continued strength in Cotlook A/AWP would provide a technical floor and prompt mean‑reversion in futures.

Key Decisions for Investors

• Reduce or hedge near‑term long exposure to front‑month cotton futures given weak weekly bookings and the second‑lowest shipments this marketing year,
• Use option‑based protection (puts or collars) to limit downside while retaining upside exposure if Cotlook A and AWP continue to firm,
• Monitor weekly export sales, weekly shipment figures and ICE certified stock reports as primary flow indicators to trigger position adjustments,
• Watch physical price signals (Cotlook A at 73.95c/lb, AWP at 51.28c/lb) and commodity‑linked drivers such as crude ($57.32) and the US dollar (98.200) for evidence of supply tightness or shifts in export competitiveness