Cotton futures closed Friday’s trading session with notable strength, with gains ranging from 45 to 99 points across various contracts. This upward movement occurred despite the U.S. Department of Agriculture’s (USDA) monthly World Agricultural Supply and Demand Estimates (WASDE) report, which indicated an increase in projected cotton production. Market participants appeared to have already factored in the higher acreage figures released by the National Agricultural Statistics Service (NASS) in the preceding week, rendering the WASDE’s production hike less impactful on immediate price action.
WASDE Report Details Production Adjustment
The latest WASDE report revealed no alterations to the old crop stocks, which remained steady at 4.2 million bales. However, the outlook for new crop cotton saw an upward revision. New crop stocks were raised by 400,000 bales to a total of 4.1 million bales. This adjustment was primarily driven by an identical increase in production, which was lifted to 13.7 million bales. This production increase directly correlates with the larger acreage data previously reported by NASS.
Market Reaction and Key Contract Performance
Despite the upward revision in production figures, cotton futures demonstrated resilience. The December contract, a key benchmark for the commodity, concluded the week with a substantial gain of 442 points, underscoring a positive sentiment among traders. On Friday specifically, October 2026 cotton closed at 79.92 cents per pound, up 99 points. The December 2026 contract settled at 81.54 cents per pound, marking an increase of 91 points. Similarly, the March 2027 contract finished the day at 82.91 cents per pound, up 94 points.
Broader Market Influences and Speculative Activity
The broader market context on Friday saw crude oil prices decline by 57 cents, while the U.S. dollar index experienced a modest increase of $0.124. These movements, while present, did not appear to significantly deter the strength observed in the cotton market. Further insights into market sentiment can be gleaned from the Commitment of Traders (COT) report. The latest COT data, released on Friday afternoon, indicated that managed money speculative funds in cotton futures and options were actively increasing their positions. In the week ending Tuesday, these funds added 7,121 contracts to their net long position, bringing the total to 39,106 contracts.
Physical Market Indicators and Certified Stocks
In addition to futures market activity, several physical market indicators also provided context. The Cotlook A Index, a key benchmark for international cotton prices, was down 50 points on Thursday, settling at 89.75 cents. Conversely, ICE certified cotton stocks saw a decrease of 26,320 bales on July 9 due to decertification. The total level of certified stocks now stands at 158,607 bales. The Adjusted World Price (AWP), a reference price used in U.S. cotton programs, saw an increase of 92 points on Thursday, reaching 62.86 cents per pound.
The ability of cotton futures to absorb the news of increased production, particularly when already anticipating higher acreage, suggests underlying demand factors or a broader bullish sentiment in the commodity. The significant weekly gain in the December contract further reinforces this positive outlook, indicating that traders are looking beyond the immediate supply figures. The continued accumulation of net long positions by speculative funds also points to growing confidence in the cotton market’s trajectory.
