Cotton Prices Face Pressure as Tighter US Supply Meets Weakening Demand Signals

Cotton futures finished Wednesday’s session mostly lower, with contracts ranging from unchanged to 17 points down as traders assessed the latest US production estimates, declining cotton output and physical-market indicators. December 2026 cotton settled at 78.52 cents per pound, down 17 points, while March 2027 closed at 82.39 cents, down 12 points. May 2027 finished at 84.06 cents, slipping 3 points.

The latest USDA Crop Production figures showed a reduction in the US cotton yield estimate and a corresponding cut in projected production. Yield was lowered by 15 pounds per acre to 775 pounds, while production declined by 267,000 bales to 13.175 million.

The WASDE report also reduced domestic use by 100,000 bales, while projected ending stocks fell by the same amount to 3.7 million bales following the production adjustment.

Despite the lower production outlook, cotton prices struggled to advance. A stronger US dollar and higher crude oil prices provided a mixed external backdrop, while ginning data highlighted a substantial year-on-year decline in accumulated US cotton output.

Market Snapshot

Current Price Action: Cotton Contracts Finish Mostly Lower

Cotton futures closed Wednesday with contracts steady to 17 points lower, reflecting a market balancing reduced US production estimates against weaker domestic use and a stronger dollar.

December 2026 cotton settled at 78.52 cents per pound, down 17 points. March 2027 declined 12 points to 82.39 cents, while May 2027 slipped 3 points to 84.06 cents.

The limited movement across the forward contracts indicates that the latest session produced relatively contained losses, although the December contract recorded the largest decline among the three.

USDA Crop Production: US Yield and Output Estimates Reduced

The latest Crop Production data delivered a reduction in projected US cotton output.

The national yield estimate was lowered by 15 pounds per acre to 775 pounds, while production was trimmed by 267,000 bales to 13.175 million bales.

The lower production estimate provides a tighter supply outlook and represents a potentially supportive factor for cotton prices.

However, the WASDE figures also showed domestic use being reduced by 100,000 bales, limiting the improvement in the overall balance sheet.

Projected ending stocks declined by 100,000 bales to 3.7 million, with the reduction reflecting the production adjustment.

WASDE Outlook: Ending Stocks Fall to 3.7 Million Bales

The latest WASDE figures showed both domestic use and ending stocks being revised lower.

Domestic use was reduced by 100,000 bales, while ending stocks also declined by 100,000 bales to 3.7 million bales.

The reduction in ending stocks offers some support to the market by indicating a smaller projected stock position. However, the simultaneous reduction in domestic use highlights the importance of demand in determining whether lower production translates into stronger prices.

Traders will continue assessing the balance between US supply reductions and consumption expectations.

US Cotton Ginnings Remain at a Three-Year Low

US cotton ginning figures highlighted a significant decline in accumulated output compared with the previous season.

A total of 2.05 million running bales were ginned during the final two weeks of October, taking the marketing-year total to 3.7 million running bales as of November 1.

That figure is 898,000 running bales below the same period last year and represents a three-year low.

The slower accumulation of ginned cotton reinforces the picture of reduced US production, although the impact on futures will depend on how the lower output compares with demand and inventory expectations.

Physical Market: The Seam and Global Price Indicators

Physical-market indicators offered additional insight into current cotton trading conditions.

The Seam reported 1,780 bales sold on November 10 at an average price of 75.21 cents per pound.

The Cotlook A Index increased by 15 points on November 10 to 90.85 cents per pound, while the Adjusted World Price declined by 94 points from the previous week to 63.57 cents per pound.

These indicators provide different perspectives on physical cotton pricing and the international market, with the Cotlook A Index moving higher while the Adjusted World Price recorded a weekly decline.

Crude Oil and US Dollar Influence Cotton Sentiment

External market movements provided a mixed backdrop for cotton futures.

Crude oil gained 38 cents per barrel during Wednesday’s session, while the US Dollar Index increased by 0.705.

Higher crude oil prices can influence sentiment across agricultural commodities through energy-market and production-cost considerations. However, the stronger dollar can weigh on internationally traded commodities by making US-priced products more expensive for overseas buyers.

The combination of higher crude and a stronger dollar therefore offered competing influences, with the dollar’s advance adding a potential headwind for cotton demand.

Bullish Sentiment: Factors Supporting Cotton Prices

1. Lower US production: The USDA reduced projected cotton production by 267,000 bales to 13.175 million.
2. Reduced yield estimate: The national yield forecast declined by 15 pounds per acre to 775 pounds.
3. Lower ending stocks: Projected US ending stocks fell by 100,000 bales to 3.7 million.
4. Three-year-low ginnings: Accumulated ginnings of 3.7 million running bales were 898,000 below last year’s comparable figure.
5. Higher Cotlook A Index: The index increased 15 points on November 10 to 90.85 cents per pound.

Bearish Sentiment: Factors Weighing on Cotton Prices

1. Reduced domestic use: WASDE lowered projected domestic consumption by 100,000 bales.
2. Stronger US dollar: The Dollar Index advanced by 0.705, creating a potential headwind for export competitiveness.
3. Lower Adjusted World Price: The AWP declined 94 points from the previous week to 63.57 cents per pound.
4. Negative futures close: December and March contracts finished lower, reflecting continued selling pressure.
5. Limited price response to supply cuts: Futures failed to advance despite the reduction in projected US production and ending stocks.

Price Forecast: What Cotton Traders Are Watching

The immediate focus is whether the reduced US production estimate and lower ending stocks can provide sufficient support to stabilise futures prices.

December 2026 cotton at 78.52 cents per pound remains an important reference point for near-term trading, while March 2027 at 82.39 cents and May 2027 at 84.06 cents provide a view of the forward curve.

Traders will be monitoring further developments in US production, ginning progress, domestic use and physical-market pricing.

The relationship between the Cotlook A Index and the Adjusted World Price will also remain relevant, particularly as the latest figures moved in opposite directions.

Market Outlook for the Coming Sessions

Cotton enters the coming sessions with a mixed fundamental picture. Lower US yield and production estimates, reduced ending stocks and three-year-low accumulated ginnings provide evidence of a tighter domestic supply outlook.

However, the reduction in domestic use, stronger US dollar and latest decline in futures have limited the market’s immediate upside response.

The key question is whether tightening supply conditions will eventually outweigh weaker demand indicators and external currency pressure.

For now, cotton futures remain under modest pressure, with December 2026 settling at 78.52 cents per pound. Traders will be watching the next developments in US crop supply, physical-market activity and export competitiveness to determine the direction of the market.

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Disclaimer: This market analysis is provided for informational and educational purposes only and does not constitute investment advice, financial advice or a recommendation to buy or sell any financial instrument. Commodity and currency markets involve risk, and past performance is not indicative of future results.

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