For the week ending Friday, February 21, the most active May’25 ICE cotton futures contract bumped higher early then slid lower for the balance of the week (see chart above courtesy of Barchart.com).  May’25 cotton futures settled the week at 67.34 cents per pound while the new crop Dec’25 settled at 69.15.  Chinese cotton prices were flat-to-higher across the week, while the pattern of the A-Index of world cotton prices was more mixed.

In other markets, the most active CBOT corn and soybeans contracts, as well as KC wheat futures, all traded this week in sideways gyrations.  The U.S. dollar index this week zigged higher, zagged lower, and then zigged less steeply higher.  This maintains the longer term appearance of a top to the post-Election Day rally that peaked January 13.   Other macro influences (i.e., GDP, inflation, and interest rate policy) remained mixed in their expectation and implication.

Cotton-focused market influences this week included bullishly low 2025 planting intentions published by the National Cotton Council. For the old crop, almost all of the projected U.S. crop is ginned and classed as of mid February. The last seven weeks of U.S. export sales reports belie a slight uptrend, which was supported by decent export sales numbers for the week ending February 13.  The pace of 2024/25 export shipments finally exceeded the weekly average level needed to reach USDA’s target level of exports (11.0 million bales).

The dynamics of ICE cotton futures may also represent a wet blanket on the market.  It remains true that unfixed call sales (by mills) are at an historically low level, perhaps reflecting the cautionary buying on the demand side.  In terms of ratios, unfixed call purchases (by suppliers) outweigh unfixed call sales by almost two-fold across all contracts.  In the nearby Mar’25 contract the imbalance is over four-fold in favor of unfixed call purchases. The implications of that imbalance are excess selling pressure on ICE futures when those March-based on call positions are fixed. Strictly speaking, this has less to do with the demand for cotton and more about the demand for futures by commercial hedgers.

For the week ending February 20, the day-to-day levels in open interest in ICE cotton decreased across the week, along with higher prices on Tuesday (resembling short covering) and lower prices the rest of the week (resembling long liquidation).  Indeed, as of Tuesday, February 18 (released Friday, February 21) the early week snapshot of speculative positioning showed hedge fund longs increasing by 1,132 contracts, while the index fund net long position expanded by 2,394 contracts, week over week.  This long positioning was further reinforced by 2,707 fewer (covered) hedge fund shorts compared to last 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.