Across the week ending Friday, July 17, ICE cotton futures traded flat-to-lower between 81 and 82 cents before sliding to the 78 cent level (see Dec’26 chart above courtesy of Barchart.com).  Dec’26 ICE cotton futures were 2.25 cents lower on Thursday, then another two thirds of a cent lower on Friday to settle the week at 78.63 cents per pound.  Chinese cotton prices were mixed this week, as was the A-Index of world cotton prices.

Other agricultural futures followed somewhat similar paths this week.  CBOT corn and soybeans both followed wide down and up gyrations.  KC wheat futures trended gradually lower, then sharply higher, and finally leveled off.  WTI oil futures rose early, plateaued, and finally rose with escalating Persian Gulf conflict.  The U.S. dollar index gyrated along a downtrend across most of the week before leveling out.

Cotton-focused news this week included a third week of minor slippage in cotton crop condition ratings, despite scattered rains (the latter implied by radar, anyway). U.S. export net sales as of July 9 weakened even more, hitting a marketing year low.  Weekly U.S. cotton export shipments continued well below USDA’s export target level. Reported demand indicators included inactive to slow spot trading, very light to moderate demand, and light to moderate supplies, all depending on the region.  On the other side of the world, various influences (e.g., South Asian monsoon, and reduced world acreage, particularly in Australia) could paint a potentially tighter global supply picture.

Through Thursday, July 16, the daily shifts in ICE cotton open interest were mixed higher and lower than the previous day.  The corresponding mix of daily price settlements suggested no clear pattern of speculative positioning. The most recent Tuesday speculative snapshot (represented by the CFTC’s CIT “Supplemental” report for July 14 showed more long positioning, mostly from short covering. Specifically, there were 300 more hedge fund longs, week over week.  This slightly reinforced by a large 6,769 decrease in hedge fund shorts compared to last week.  Lastly, the index fund net long position expanded by 983 contracts, week over week.

The dynamics of ICE cotton futures may also represent a wet blanket on the market, but one that is perhaps lifting. The recently falling certified stock levels could reflect improving commercial demand for U.S. cotton.  It remains true that unfixed call sales (representing potential/eventual futures buying by mills) have been at a relatively low level, perhaps reflecting the cautionary buying on the demand side. But more recently, unfixed call sales have been stabilizing/rising (see red line in the chart below).  This is bringing them more into balance with unfixed call purchases, and contributing to futures buying.

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.