For the week ending Friday, December 20, the nearby Mar’25 ICE cotton futures slipped, recovered, and slipped some more, settling lower across the entire week (see chart above courtesy of Barchart.com). After a week of bloodletting, the Mar’25 settled up a mere 15 points at 68.06 cents per pound. The new crop Dec’25 settled the week at 69.28 cents per pound. Chinese cotton prices and the A-Index of world cotton prices also both eroded across the week.
In other markets, nearby CBOT corn futures gyrated sideways while CBOT soybeans and KC wheat futures followed more of a downtrend across the week. U.S. dollar index showed a wide V-shaped pattern, trending lower for the first part of the week and then recovering after the Federal Reserves intimating of minimal future interest rate cuts. Other macro influences (i.e., GDP, inflation, and interest rate policy) were typically mixed in their implication.
There weren’t many apparent cotton-specific influences this week to explain the weakness in ICE cotton futures. Over 80% of the U.S. crop has been ginned and classed. We had a continuation of modest weekly U.S. export sales It will look bad for demand if this week’s erosion of prices doesn’t stimulate higher net sales. The pace of 2024/25 export shipments remained below the needed weekly average pace to reach USDA’s target level of exports, though this is not unusual for this supply-dominated time of the year.
For the week ending December 19, the day-to-day levels in open interest in ICE cotton modestly increased. Coupled with the erosion in prices, this had the appearance of new outright short positioning. Indeed, as of Tuesday, December 17 (released Friday, December 20) the weekly snapshot of speculative positioning showed 6,294 more hedge fund shorts than the previous week, which was not affected by the small (226) new hedge fund longs or the small (434) expansion in the index fund net long position, week over week.
For more details and data on Old Crop and New Crop fundamentals, plus other near term influences, follow these links (or the drop-down menus above) to those sub-pages.
Source: TAMU