For the week ending Friday, October 27, Dec’23 cotton futures reversed the slide from the previous week, took a big step higher on Monday, followed by a more gradual ascent (see chart above courtesy of Barchart.com).  Friday saw prices peak and settle down 21 points on the day at 84.38 cents per pound.  Chinese cotton prices and the the A-Index of world cotton prices both flat/sideways this week.

In other ag futures markets, CBOT corn and KC wheat futures both saw gentle down-trends while CBOT soybeans gyrated sideways across the week.  The U.S. dollar index fell Monday, climbed higher, then leveled off Friday. Other macro influences (i.e., GDP, inflation, and interest rate policy) remain a potential headwind to longer term cotton demand.

Cotton-specific influences included rainy pre-harvest and harvest weather over the southern plains region.  Recent rains represent a negative influence on the 2023 crop (i.e., delaying harvest and bad for color grades).  The latest Texas regional summaries and feature article both highlight some of the benefits of the recent rainfall — to range, wheat, and next year’s spring crops  (click here).

U.S. export sales through October 19 were much improved week over week, and reflect the expected response of more U.S. cotton export sales from recent lower prices. Actual export shipments were below the needed weekly average pace, but this is seasonally normal.  USDA’s weekly summary of the U.S. regional markets continued to reflect mixed spot physical trading activity and very light to moderate demand, across the U.S. regions.  Several other standard predictors of U.S. cotton demand are not encouraging, e.g., rising certified stocks and historically low levels of on-call sales.

ICE cotton futures open interest continued to erode this week.  The coincidence of higher settlements gave the appearance of short covering, as opposed to last week’s long liquidation and outright shorting. However, at least through the regular Tuesday (October 24) snapshot of speculative positioning, there was continued long liquidation with 7,336 fewer hedge fund longs and  3,718 fewer net index fund longs, week over week.  This was reinforced by 3,254 more outright hedge fund shorts compared to the previous Tuesday.  So if there was a reversal of this, it happened later in the 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.