Cotton Prices Face a Critical Monday Open as Weak Export Sales Clash with Fund Buying and a Softer US Dollar

Cotton futures ended Friday mixed, with contracts ranging from a 19-point decline to a 24-point gain, while December cotton lost 54 points over the week. The market enters Monday’s open balancing weaker US export sales and shipments against continued managed-money buying, rising crude oil prices and a softer US dollar.

The immediate outlook is mixed, with a cautious bias following December’s weekly decline. However, speculative positioning remains supportive, and the next move will depend on whether buyers return after the weekend or sellers extend the recent weakness.

Market Snapshot

Point changes in cotton futures are expressed in hundredths of a cent per pound. Figures reflect the supplied market report.

Monday Cotton Open: Three Forces Will Set the Tone

The first session of the new trading week will be important in determining whether Friday’s mixed performance represents consolidation or the beginning of another leg lower.

Three factors stand out.

1. Weak export momentum: US cotton sales declined 11.12% week-on-week, while shipments fell 13.11%. The figures raise questions about near-term demand momentum, even though sales remain active across several destinations.

2. Continued fund buying: Managed money added 1,862 contracts to its net long position, taking the total to 65,699 contracts as of October 13. This suggests speculative investors have continued to build bullish exposure, although a large net long position can also leave the market vulnerable to profit-taking.

3. A softer dollar and stronger crude oil: The dollar’s decline could improve the competitiveness of US cotton exports, while higher crude oil prices may influence synthetic-fibre economics and agricultural production costs. Neither factor guarantees stronger cotton prices, but both could affect sentiment at Monday’s open.

The key signal will be whether December cotton can recover from Friday’s weakness. A firmer open followed by sustained buying would suggest that demand and positioning are supporting prices. A weak open with continued selling would leave the weekly downtrend in focus.

US Export Sales: Demand Remains the Main Concern

USDA export sales totalled 146,892 running bales in the week ending October 8, down 11.12% from the previous week.

Costa Rica was the largest reported buyer, taking 74,300 bales. India purchased 21,300 bales, while Pakistan bought 19,800 bales. Sales for the 2027/28 season totalled 7,182 bales.

Shipments reached 140,561 running bales, falling 13.11% week-on-week, although they were 0.94% higher than the same week last year. Vietnam was the leading destination with 40,800 bales, followed by India with 20,100 bales.

The figures present a mixed demand picture. The weekly declines in sales and shipments are a near-term headwind, but shipments remaining slightly above the year-earlier level provide some reassurance.

For Monday, traders will be looking for evidence that export demand can stabilise. Further deterioration could put pressure on futures, while improving sales or stronger shipment activity could help attract buyers.

Speculative Positioning: Funds Continue to Support Cotton

Managed money increased its net long position by 1,862 contracts to 65,699 contracts in cotton futures and options as of October 13.

This positioning indicates that speculative investors remain net bullish. It may help limit downside if fresh buying emerges at the start of the week.

However, positioning also creates a potential risk. If prices weaken and funds begin reducing exposure, long liquidation could accelerate losses. The latest report does not establish that such selling has begun, but traders should monitor subsequent positioning data for signs of a shift.

The important distinction is between funds maintaining existing bullish exposure and actively adding fresh buying after the weekend. The latter would provide stronger confirmation of renewed upside momentum.

Physical Cotton Market: Prices and Certified Stocks

Physical-market indicators offered some support in the latest report.

The Cotlook A Index rose 20 points to 91.45 cents per pound. The Adjusted World Price increased 80 points to 64.61 cents per pound, while ICE certified cotton stocks declined by 2,627 bales to 15,129 bales.

The Seam reported 404 bales sold on October 15 at an average price of 73.56 cents per pound.

Lower certified stocks can be supportive when they reflect tightening availability, but the reported decline alone does not establish a broader shortage of physical cotton. Certified inventories represent a specific part of the deliverable market and should be considered alongside global production, mill demand and wider stock estimates.

For Monday, the physical indicators provide a counterweight to the weaker export-sales figures, but confirmation from futures and export demand will be needed.

Crude Oil and the US Dollar: External Drivers for Monday

Crude oil rose $3.87 per barrel on Friday, while the US dollar index fell 0.255.

A softer dollar can support US cotton competitiveness by making dollar-priced exports relatively less expensive for overseas buyers when exchange rates adjust accordingly. The benefit depends on the currencies of competing exporters and the extent to which exchange-rate movements are reflected in contract prices.

Higher crude oil prices can also influence cotton through synthetic-fibre competition and agricultural input costs. Cotton competes with polyester in textile applications, and sustained increases in oil-related feedstock costs may affect the relative economics of these fibres. The relationship is indirect, however, and does not guarantee a corresponding rise in cotton futures.

If the dollar remains weak and crude oil holds its gains into Monday, these external factors could help support sentiment. A reversal in either market would remove part of that potential support.

Bullish Sentiment: What Could Drive Cotton Higher?

1. Continued fund buying: Managed money remains net long, creating the potential for further buying if confidence improves.
2. A weaker US dollar: Continued dollar softness could support the competitiveness of US cotton exports.
3. Higher crude oil prices: Sustained strength in oil could influence synthetic-fibre costs and cotton’s relative appeal.
4. Improving physical indicators: The higher Cotlook A Index and Adjusted World Price provide some evidence of firmer physical-market measures.
5. Stronger export demand: A recovery in weekly sales and shipments could help restore confidence in the demand outlook.
6. Stabilisation in December futures: A recovery after the weekly decline could encourage short-term buyers to return.

Bearish Sentiment: Risks Facing the Monday Open

1. Weak export sales: The 11.12% weekly decline indicates that demand momentum has softened.
2. Lower shipments: The 13.11% week-on-week fall raises questions about the pace of US export execution.
3. Long-position liquidation: Funds holding a substantial net long position could reduce exposure if prices weaken.
4. Continuation of the weekly decline: December cotton’s 54-point weekly loss leaves momentum vulnerable if buyers fail to return.
5. A stronger dollar: Renewed dollar appreciation could make US cotton less competitive internationally.
6. Weak textile demand: If mill demand remains subdued, lower certified stocks alone may not be enough to sustain a rally.

Cotton Price Forecast: What Traders Should Watch on Monday

The Monday outlook is mixed, with a cautious bias after December cotton’s weekly decline and the latest weakness in export sales. The main support comes from continued fund buying, a softer dollar and firmer physical-market indicators.

Three scenarios matter for the next session:

• Bullish scenario: December cotton stabilises and attracts buying, the dollar remains weaker, and traders give greater weight to fund positioning and physical-market support.
• Bearish scenario: Futures open lower or fail to recover, while traders focus on weaker export sales and shipments. Long liquidation could add to the pressure.
• Neutral scenario: Prices trade sideways as the market balances weaker demand indicators against speculative positioning and external support.

The first priority is to observe the reaction around the reported December settlement of 80.00 cents per pound. A sustained recovery would suggest buyers are defending the market, while continued weakness would leave the recent decline in control. These are reference points from the supplied data, not confirmed technical support or resistance levels.

Cotton Market Outlook for the Coming Sessions

Cotton enters the new week with conflicting signals. Export sales and shipments have weakened on a weekly basis, and December futures lost ground over the week. At the same time, managed-money net buying increased, physical-market indicators moved higher and the US dollar weakened.

The balance of evidence does not yet justify a confident call for a sustained rally. The most useful confirmation would be a recovery in futures accompanied by improving export demand or continued strength in physical indicators.

If those signals fail to emerge, the market could remain vulnerable to further selling. If buyers return and external conditions remain supportive, cotton may attempt to stabilise after the weekly decline.

Currency Hedger View

For cotton merchants, textile manufacturers and international agricultural traders, commodity prices are only one part of the cost equation. Exchange-rate movements can materially change the local-currency cost of cotton purchases and the value of export receipts.

A weaker US dollar may improve purchasing conditions for some overseas buyers, but the actual benefit depends on the buyer’s domestic currency and the currency used in the transaction. Businesses with upcoming cotton payments or export receipts should assess both commodity-price risk and foreign-exchange exposure.

Forward contracts may help eligible businesses establish greater certainty over future currency conversions, particularly where purchase volumes and settlement dates are known.

Open a Currency Hedger account: https://currencyhedger.numito.com/onboarding

Visit https://currencyhedger.com/ to learn more about international payments, multi-currency accounts and currency risk management.

Today Markets Analysis

Cotton’s Monday open will test whether speculative positioning and firmer physical indicators can offset weaker US export sales and shipments. December futures ended the week lower, leaving the market vulnerable if sellers remain active.

A softer dollar and stronger crude oil offer potential support, but the direction of trade will depend on price reaction and fresh evidence of demand. Traders should avoid treating the latest fund positioning or physical-stock decline as a guarantee of higher prices.

For the coming sessions, export demand, fund activity, the dollar and the ability of December cotton to stabilise will be the main indicators to monitor.

Contributor: Currency Hedger

Disclaimer: This analysis is provided for informational and educational purposes only and does not constitute investment, financial or trading advice. Cotton futures and agricultural commodity markets are volatile and can respond rapidly to export data, speculative positioning, weather, supply and demand, energy prices and currency movements. Forecasts and scenarios are not guarantees of future performance. Businesses and traders should conduct independent research and seek professional advice where appropriate.

Register a Revolut Business Account