Cotton futures experienced a notable downturn on Friday, with most contracts settling lower as traders looked ahead to the Memorial Day weekend. The July contract, in particular, registered a substantial weekly loss, signaling a bearish sentiment in the market ahead of the holiday break.
Friday’s Market Action
On Friday, cotton futures were trading between 8 and 56 cents lower across most contracts. The July contract was particularly impacted, closing down 319 points for the week. The December contract also saw a decline, falling 258 points since the previous Friday. This downward trend occurred despite a slight uptick in the U.S. dollar index, which rose $0.052 to $99.270, and a modest increase in crude oil prices, up $0.65 to $97.00 on the day.
The market will observe a closure on Monday in observance of Memorial Day, with trading set to resume at its normal opening time on Tuesday.
Key Data and Commitments
Recent data from the Commodity Futures Trading Commission (CFTC) indicated that managed money accounts increased their net long positions in cotton futures and options. In the week ending May 19, these accounts added 2,475 contracts, bringing their total net long position to 62,045 contracts. This suggests a degree of bullish conviction among speculative traders, contrasting with the recent price action.
The U.S. Department of Agriculture’s (USDA) Export Sales report provided further context for the market. The total cotton export commitment level stood at 10.994 million Running Bales (RB), which is 1% below the previous year’s figures. This commitment level represents 98% of the USDA’s export projection, falling short of the 106% average seen historically.
Physical Market and Price Indicators
In the physical market, The Seam reported 962 sales on Thursday, with an average price of 75.27 cents per pound. The Cotlook A Index, a key benchmark for international cotton prices, declined by 75 points on May 21, settling at 91.50 cents.
ICE certified cotton stocks saw an increase of 3,746 bales on Thursday, bringing the total certified stock level to 213,969 bales. Meanwhile, the Adjusted World Price (AWP) experienced a dip, falling 319 points on Thursday to 68.68 cents per pound. This indicator often influences domestic loan rates and can reflect broader supply and demand dynamics.
Specific Contract Performance
Looking at specific futures contracts, the July 2026 Cotton contract closed at 77.42 cents, down 56 points on the day. The December 2026 Cotton contract finished at 79.33 cents, a decrease of 40 points. The March 2027 Cotton contract settled at 80.19 cents, down 39 points.
The recent price movements suggest that despite some speculative interest, broader market forces and export data are weighing on cotton futures as the market heads into the holiday weekend. Traders will be looking for any new developments or shifts in sentiment when trading resumes on Tuesday.
