Cotton Futures Extend Weekly Losses as Speculative Buying Eases and Export Sales Lag Average Pace

Today Markets Analysis

Cotton futures remain under pressure after contracts closed lower across the board on Friday, extending the market’s weekly decline. December cotton settled at 77.83 cents per pound, down 67 points on the session and 237 points for the week. March and May contracts also recorded losses, reflecting continued weakness across the futures curve.

The latest positioning data shows managed money reducing its net-long exposure, while US export sales remain ahead of last year’s level but below the five-year average pace. This combination leaves the market balancing relatively encouraging annual export demand against a slower-than-average sales programme and reduced speculative support.

Crude oil provided some support to the broader commodity complex, rising 95 cents per barrel, while a slightly weaker US dollar offered a modestly favourable external backdrop. However, neither development was sufficient to prevent cotton futures from closing lower.

Market Snapshot

Current Cotton Price Action

December cotton closed at 77.83 cents per pound, down 67 points on Friday. March 2027 futures settled at 81.59 cents, losing 66 points, while May 2027 finished at 83.23 cents, down 63 points.

The December contract’s 237-point weekly decline highlights the extent of the recent selling pressure. Weakness across the nearby and deferred contracts suggests that the market is facing broader pressure rather than an isolated decline in the front month.

Crude oil’s 95-cent advance and the US dollar index’s 0.066-point decline provided a more supportive external backdrop. Nevertheless, cotton failed to respond positively, leaving attention focused on speculative positioning, export demand and the pace of physical-market activity.

Speculative Positioning: Managed Money Reduces Net Long Exposure

The latest Commitment of Traders figures show that large managed-money speculators reduced their net-long position in cotton futures and options by 10,276 contracts as of October 27.

Their net-long exposure consequently declined to 59,190 contracts.

Although managed money remains positioned net long, the reduction indicates that speculative support has weakened. Continued liquidation could leave cotton vulnerable to additional selling pressure, particularly if export demand and physical-market activity fail to improve.

The positioning data will remain important because a further reduction in net-long exposure could amplify price weakness, while stabilisation in speculative holdings may help the market establish a more reliable support base.

US Export Sales: Ahead of Last Year but Behind Average Pace

USDA export sales data showed 5.665 million running bales of cotton sold for the 2026/27 marketing year as of October 22.

Sales are 16% ahead of the corresponding period last year, indicating an improvement in year-on-year demand. However, commitments represent 49% of the USDA export projection, compared with the five-year average pace of 56%.

This gap suggests that export sales are progressing more slowly than the historical benchmark required at this stage of the marketing year.

The year-on-year improvement offers a constructive demand signal, but the market will need to see stronger sales activity to close the gap with the longer-term average. Further export commitments and shipment performance will therefore be important indicators for the coming sessions.

Physical Market and Certified Stocks

Physical-market activity remained limited. The Seam reported only 418 bales sold on October 29, at an average price of 71.62 cents per pound.

The Cotlook A Index recovered 15 points on October 29 to 89.85 cents per pound, providing a modestly firmer indication from the international physical market.

ICE certified cotton stocks remained unchanged on Thursday at 27,591 bales. The absence of a change in certified inventories offers no immediate indication of a significant shift in exchange-deliverable supply.

Meanwhile, the Adjusted World Price declined by 50 points to 64.51 cents per pound.

The combination of limited reported sales, unchanged certified stocks and a lower Adjusted World Price leaves the physical-market picture mixed. Traders will be watching for evidence that stronger physical demand is developing alongside the improvement in year-on-year export sales.

Bullish Sentiment

1. Export sales remain ahead of last year: US cotton sales of 5.665 million running bales are 16% higher than the previous year’s level, providing evidence of improved year-on-year demand.
2. Crude oil advances: A 95-cent-per-barrel increase in crude oil offers a potentially supportive influence across the wider commodity complex.
3. Slightly weaker US dollar: The 0.066-point decline in the dollar index provides a modestly more favourable external environment for dollar-priced commodities.
4. Cotlook A Index recovers: The 15-point increase to 89.85 cents per pound indicates some improvement in the international physical-market reference price.
5. Managed money remains net long: Despite the recent reduction, speculative positioning remains net long at 59,190 contracts rather than moving into an overall net-short position.

Bearish Sentiment

1. Significant weekly futures losses: December cotton declined 237 points over the week, demonstrating continued selling pressure.
2. Speculative liquidation: Managed money reduced its net-long position by 10,276 contracts, weakening an important source of market support.
3. Export sales trail historical averages: Although sales are ahead of last year, the 49% completion rate remains below the five-year average pace of 56%.
4. Limited physical-market activity: The Seam reported just 418 bales sold, indicating relatively subdued reported trading activity.
5. Lower Adjusted World Price: The 50-point reduction to 64.51 cents per pound adds to the mixed signals coming from the physical market.

Cotton Price Forecast: What Traders Are Watching

Cotton enters the next trading sessions under pressure, with the December contract’s weekly decline and the reduction in managed-money exposure representing the clearest near-term bearish signals.

The immediate challenge for the market is to stabilise around current levels and demonstrate that export demand can translate into stronger buying activity. The 16% year-on-year improvement in US sales is encouraging, but the slower-than-average pace remains a concern.

A recovery in futures would be better supported by stronger export sales, improved physical-market activity and a stabilisation in speculative positioning. Further managed-money liquidation or disappointing export data could leave prices exposed to additional downside.

Traders will also monitor crude oil and the US dollar for changes in the broader commodity environment. However, the immediate direction is likely to remain closely linked to cotton-specific demand and positioning developments.

Market Outlook for the Coming Sessions

The near-term outlook remains cautious to bearish while December cotton struggles to recover from its weekly decline.

The market has some supportive elements, particularly year-on-year export sales growth and a firmer Cotlook A Index. However, these positives are being offset by the reduction in speculative net-long exposure, limited reported physical trading and export commitments that remain behind the five-year average pace.

For the next sessions, traders will be watching whether December cotton can stabilise around the 78-cent area. A sustained recovery above that level would help improve the immediate technical picture, although stronger confirmation would be needed from demand and positioning data. Failure to regain this area could leave the contract vulnerable to further selling.

The balance of risks remains tilted to the downside unless export demand improves and speculative liquidation begins to ease.

Currency Hedger View

Cotton’s latest decline highlights the importance of monitoring both commodity-price movements and currency exposure across the agricultural supply chain.

For cotton merchants, textile manufacturers, processors and international buyers, lower futures prices may influence procurement costs and inventory valuations. However, businesses purchasing or selling cotton across borders must also account for exchange-rate movements, which can alter the effective cost or value of a transaction.

The improvement in year-on-year export sales provides a constructive demand signal, but the slower-than-average sales pace and reduction in speculative positioning suggest that price uncertainty remains elevated.

Currency Hedger encourages businesses with material cotton or foreign-exchange exposure to assess their underlying commercial commitments, settlement currencies and purchasing timelines when considering appropriate risk-management strategies.

Explore Currency Hedger or open an account to discuss your commodity and currency exposure.

Disclaimer: This market analysis is provided for informational purposes only and does not constitute investment advice, financial advice or a recommendation to buy or sell any financial instrument or commodity. Futures and derivatives trading involves significant risk and may not be suitable for all investors. Market prices and forecasts can change without notice. Always conduct independent research and seek professional advice where appropriate.

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