Cotton futures extended their rally into Tuesday’s trading session, with a significant number of contracts approaching the three-cent limit at their highs. This upward momentum saw contracts closing 99 to 299 points higher, reflecting a robust demand for the commodity.
Market Dynamics and External Influences
The commodity’s advance occurred against a backdrop of mixed outside markets. Crude oil experienced a notable surge of $3.65, a reaction to overnight events where Iran reportedly struck vessels in the Strait of Hormuz. In response, the United States took action by revoking waivers that had previously authorized Iran’s oil exports. Concurrently, the U.S. dollar index saw a modest increase, closing $0.230 higher.
Crop Progress and Condition Data
Recent data released on Monday afternoon provided insights into the U.S. cotton crop’s development. As of Sunday, 49% of the nation’s cotton crop had reached the squaring stage, which is 2% ahead of the normal pace for this time of year. Furthermore, 14% of the crop was observed to be setting bolls, a figure that aligns precisely with the five-year average.
However, condition ratings for the crop showed a slight decline. The overall good/excellent rating was pegged at 46%, representing a 2 percentage point decrease from the previous week. The Brugler500 index, a broader measure of crop health, also saw a dip, falling 3 points to 332. Regionally, Texas reported a 2-point decrease in ratings, while Georgia experienced a 3-point improvement.
Trade Data and Export Activity
Monthly trade data from the Census Bureau revealed a significant increase in cotton exports for May. A total of 1.46 million bales were exported, marking a 15.3% rise compared to the previous year and reaching a three-year high. Despite this year-over-year growth, the May export figure was down 6.88% from the preceding month.
Physical market activity, as reported by The Seam, indicated 182 bales were sold on July 6th at an average price of 69.54 cents. The Cotlook A Index, a key benchmark for international cotton prices, remained steady on Monday at 85.80 cents.
Inventory and Price Adjustments
ICE-certified cotton stocks reported no change on July 6th, with the total level of certified stocks standing at 185,034 bales. In contrast, the Adjusted World Price experienced a decline, falling by 194 points last week to settle at 61.94 cents per pound.
Key Contract Performance
The rally was evident across various contract months. The July ’26 Cotton contract closed at 76.94, up 299 points. The December ’26 Cotton contract finished the day at 81.29, also gaining 299 points. The March ’27 Cotton contract saw a rise of 296 points, closing at 82.68.
The sustained upward movement in cotton futures, coupled with the approaching limit gains, suggests a market driven by a combination of fundamental factors and potentially speculative interest, all unfolding against a complex geopolitical and economic backdrop.
