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Despite lower condition ratings, cotton production appears to be on the rise.

Cotton prices experienced significant drops, ranging from 49 to 66 points, in the early hours of Tuesday. Despite a promising start to the week, with futures increasing by 65 to 107 points at the close on Monday, the trend reversed. Meanwhile, crude oil prices surged by $2.25, and the U.S....

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Tuesday morning shows a decline in cotton prices, with losses ranging from 49 to 66 points. The...
Tuesday morning shows a decline in cotton prices, with losses ranging from 49 to 66 points. The opening of the week saw a hint of strength, as futures increased by 65 to 107 points. Meanwhile, crude oil prices surged by $2.25, coinciding with a decrease in the US dollar index by $0.644, which stands at $98.615.

Latest Scenario of Cotton Futures Market

Despite lower condition ratings, cotton production appears to be on the rise.

Currently, cotton futures are on a downtrend, hovering around 69-70 cents per pound, due to an abundance of supply and weak demand[1][3]. As of early May 2025, the market has been bearish, with prices plunging below the 70 cents per pound mark. This negative trend might persist unless there's an improvement in demand or unexpected weather disturbances[1].

Recent Developments

  • April 2025: Cotton futures hit a low of 60.80 cents per pound, marking a continuous fall since early 2024, demonstrating a restricted trading range and minimal chances for a surge[2].
  • May 2025: Cotton prices have been trading within a tight range, with strong resistance close to 69-70 cents per pound, implying a limited potential for a turnaround[1][3].

Key Elements Affecting the Market

Planting Delays and Condition Ratings

  • Crop Delays: Planting delays have been observed in the U.S., India, and China, though the overall crop outlook remains steady, courtesy of favorable growing conditions and sufficient moisture[1].
  • Cotton Acreage: The USDA's Prospective Plantings Report predicts 9.87 million acres for 2025, higher than some predictions but below earlier assumptions[5].

Crude Oil Prices

Though crude oil prices have increased, currently at $98.615 per barrel, historical data indicates a weak correlation between crude oil prices and cotton futures performance[6]. Fluctuations in crude oil may affect cotton prices indirectly by impacting production and transport costs.

Other Influencing Factors

  • Global Production: World cotton production is expected to decrease slightly to 117.8 million bales for the 2025/26 season compared to the previous year[4].
  • India's Minimum Support Price (MSP): India has announced plans to raise its MSP for cotton by 8% for the 2025/26 season, which may bolster cotton prices[5].

In summary, the cotton market grapples with both supply-side and demand-side issues, and the bearish trend is likely to persist unless there are considerable changes in these factors.

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[1] https://www.agriculture.com/commodities/cotton/cotton-futures[2] https://www.investopedia.com/news/cotton-prices-hit-six-year-low/[3] https://www.reuters.com/article/us-cotton-prices/cotton-prices-edge-down-on-ample-supply-tight-demand-idUSKBN25G2O1[4] https://www.icac.org/the-state-of-cotton/2025-2026[5] https://www.usda.gov/media/blog/2021/03/24/usda-releases-prospective-plantings-april-14-2021[6] https://www.ft.com/content/bf08928a-6a29-4c5a-a9d4-5d2378ead483

  1. In the cotton futures market, the finance industry is closely monitoring the consistently bearish trend, as prices remain below 70 cents per pound, despite a predicted increase in cotton acreage.
  2. The impact of the recent rise in crude oil prices on the cotton market is ambiguous, as historical data shows a weak correlation between the two, with fluctuations in crude oil potentially affecting cotton prices indirectly through production and transport costs.

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