ICE Cotton Futures Experience Sideways Gyration Amid Drought Concerns

ICE cotton futures experienced a sideways gyration during the week ending September 11, despite an initial increase in price. The most active Dec '26 contract settled at 88.22 cents per pound on Thursday, up 1.77 cents from the previous Thursday's settlement. However, it dropped to 86.06 cents per pound on Friday, down 2.16 cents from Thursday.

Chinese cotton prices declined across the week, while the A-Index of world cotton prices was relatively flat or mixed. Other agricultural futures had mixed performances, with CBOT corn trading sideways before dropping and then stabilizing at a lower level, while CBOT soybeans and KC wheat futures trended upward. WTI oil futures followed a steady uptrend, and the U.S. dollar index dipped and recovered in an U-shaped pattern.

The USDA made modestly bullish supply and demand adjustments this week, but the aggregate U.S. cotton crop condition slipped five percentage points out of the Good-Excellent category into the Fair category. The Cotton Belt received scattered rains from New Mexico to Virginia, but northwestern Texas remained dry due to a lack of rainfall.

Current marketing year net export sales of upland cotton were improved over the prior week, but remained below USDA's export target level for the 2026/27 marketing year. Speculative positioning in ICE cotton futures shifted from net long early in the week to a shift towards liquidating hedge fund longs, outweighing covered hedge fund shorts and an expansion in index fund net long positions.

The recently falling certified stock levels may reflect improving commercial demand for U.S. cotton, while unfixed call sales rose past the level of unfixed call purchases, indicating bullish indicators from mills buying or potentially buying cotton futures.