Cotton futures saw a notable correction lower on Thursday, with front-month contracts experiencing declines ranging from 175 to 287 points. This downward movement occurred against a backdrop of a strengthening U.S. dollar index, which rose $0.352 to $98.775, and a modest uptick in crude oil prices, which gained $1 to settle at $102.02.
Geopolitical Undertones and Limited Trade Details
The market also reacted to the conclusion of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing. While the meeting concluded early Thursday morning, few specific details were released. Notably, there was no mention of any potential cotton purchase agreements stemming from the high-level discussions, a factor that may have contributed to the subdued sentiment in the cotton market.
Weak Export Sales and Shipment Data
Further pressure on cotton prices came from the latest USDA Export Sales report. For the week ending May 7, 2026, the report indicated that 47,699 Running Bales (RB) of cotton were sold for the 2025/26 marketing year. This figure represents a marketing year low and a significant decrease of 27.47% compared to the same week in the previous year. Vietnam emerged as the primary buyer, accounting for 31,800 RB, with Indonesia purchasing an additional 4,100 RB. The report also detailed new crop sales of 29,716 RB, with Vietnam again leading as the largest buyer at 13,800 RB.
Shipments also showed a slowdown, totaling 290,293 RB for the week, marking an eight-week low. Vietnam was the top destination for these shipments, receiving 84,100 RB, followed by Turkey, which imported 37,600 RB.
Physical Market and Certified Stocks
In the physical cotton market, The Seam reported sales of 1,228 bales on Tuesday, with an average price of 85.30 cents per pound. The Cotlook A Index, a key benchmark for international cotton prices, experienced a decline of 150 points on May 13, settling at 97.65 cents. Meanwhile, ICE certified cotton stocks saw an increase of 1,066 bales on May 13, bringing the total certified stock level to 186,444 bales.
Adjusted World Price and Futures Performance
The Adjusted World Price (AWP) for cotton continued its upward trend, adding another 228 points on Thursday to reach 71.87 cents per pound. This figure is subject to update later in the day. Despite the rise in AWP, the futures market reflected broader bearish sentiment.
Futures Contract Performance
- July 2026 Cotton futures closed at 83.94, down 287 points.
- December 2026 Cotton futures closed at 84.48, down 198 points.
- March 2027 Cotton futures closed at 85.06, down 197 points.
The confluence of a stronger dollar, limited clarity from the U.S.-China meeting, and weaker-than-expected export data contributed to the downward pressure on cotton futures throughout Thursday’s trading session. Market participants will be closely monitoring upcoming trade developments and USDA reports for further direction.
