Cotton futures concluded Thursday’s trading session with a notable rally, as contracts across the board advanced between 80 and 159 points. This upward momentum was largely underpinned by supportive external market conditions and fresh data from the U.S. Department of Agriculture (USDA) that provided a nuanced view of supply and demand dynamics.
The May 2026 cotton contract led the charge, closing at 73.26 cents per pound, marking a substantial increase of 159 points. Following closely, the July 2026 contract also saw a strong performance, settling at 75.32 cents per pound, up 174 points. The December 2026 contract, representing new crop, closed higher by 140 points at 76.87 cents per pound, reflecting broader market optimism.
External Market Tailwinds
The broader financial landscape offered a generally supportive backdrop for cotton prices. A key factor was the depreciation of the U.S. dollar, which saw its index decline by $0.325 to $98.600. A weaker dollar typically makes dollar-denominated commodities, such as cotton, more attractive to international buyers, thereby boosting demand.
Concurrently, crude oil prices experienced a significant rebound, climbing $4.06 on the day. Rising energy costs can influence the production expenses for synthetic fibers, potentially making natural fibers like cotton more competitive. This interplay between currency movements and energy markets often provides critical directional cues for agricultural commodities.
USDA Balance Sheet and Export Activity
The monthly update to the USDA balance sheet for cotton presented a mixed but ultimately stable picture for the U.S. market. The U.S. carryout figure remained unchanged at 4.4 million bales, indicating a consistent supply outlook domestically. The cash average price, however, registered a slight increase of a penny, settling at 61 cents per pound, suggesting firming spot market conditions.
On the global front, the world balance sheet for cotton saw an upward revision, increasing by 0.65 million bales to a total of 77.04 million bales. This adjustment reflects a slight expansion in global supply, yet the market’s reaction suggests that other factors, particularly demand and external support, outweighed this increase.
Robust Export Sales Drive Demand Narrative
Further bolstering the market’s positive sentiment was the USDA’s Export Sales report, released on Thursday morning for the week ending April 2nd. The report tallied substantial sales of 319,580 running bales (RB) of cotton for the 2025/26 marketing year. Vietnam emerged as the top buyer, securing a significant 132,500 RB, followed by Turkey, which purchased 67,800 RB.
While current crop sales were strong, new crop business for the same week was notably lower, registering just 14,051 RB. This figure represented the lowest new crop sales since early January, indicating a potential pause in forward contracting despite the overall strong demand for immediate delivery. Shipments for the week also saw a three-week low at 342,744 RB, with Vietnam again being the primary destination, receiving 126,200 RB. China and India also received substantial shipments of 39,000 RB and 37,100 RB, respectively, underscoring the continued global demand for U.S. cotton.
Spot Market and Index Performance
Additional market data provided further context to the rally. The Seam, an online cotton trading platform, reported 1,751 bales sold on Wednesday at an average price of 67.87 cents per pound. This activity in the spot market aligns with the general upward trend observed in futures.
Conversely, the Cotlook A Index, a benchmark for global cotton prices, was 30 points lower on April 7th, settling at 82.25 cents. This divergence suggests that while futures and some spot markets were gaining, the international benchmark reflected a slight softening earlier in the week. ICE certified cotton stocks remained unchanged on April 8th, holding at 128,213 bales, indicating stable physical inventory levels. The Adjusted World Price, however, saw a significant increase of 175 points on Thursday afternoon, reaching 58.74 cents per pound, further signaling strengthening prices for U.S. cotton in the global market.
The confluence of a depreciating U.S. dollar, rising crude oil prices, and robust export demand, as detailed in the latest USDA reports, provided a strong impetus for cotton futures to rally on Thursday. Despite some mixed signals from the Cotlook A Index and lower new crop sales, the overall market sentiment appears to be driven by a supportive macroeconomic environment and consistent international purchasing, suggesting a resilient demand base for the commodity.
