Cotton futures reversed sharply from Tuesday’s near limit-up surge, trading 90 to 98 points lower on Thursday as prices corrected and outside markets moved higher. Oil jumped after the U.S. struck Iran overnight and the White House signaled the ceasefire had ended, while the U.S. dollar index also edged up, tightening financial conditions that can affect commodity demand and pricing.
On the demand side, U.S. export data showed momentum but with a year-over-year pullback. Monthly Census figures reported 1.46 million bales of cotton exports in May—15.3% above a year earlier and the highest in three years—though that total was down 6.88% versus the same period a year ago, according to the report.
Key takeaways
- Price move: Cotton futures were down about 90 to 98 points on the day, following corrections from near limit gains posted on Tuesday.
- Catalyst: A mix of stronger oil and a firmer U.S. dollar coincided with new export and market-inspection updates.
- Export data: May shipments reached 1.46 million bales, supported by a 3-year high, even as year-over-year comparisons showed a decline versus the prior period in the same dataset.
- Supply signals: Certified ICE cotton stocks fell on decertification, which can influence expectations for near-term availability.
- Implication: Investors are balancing geopolitical and FX-driven commodity tailwinds against short-term price profit-taking and shifting supply metrics.
What drove the correction in cotton
The immediate driver of Thursday’s lower cotton futures was technical correction after Tuesday’s outsized advance. Contracts that had pushed close to limit levels were pulled back as traders reassessed near-term pricing following the rally.
At the same time, risk and macro factors in broader markets leaned supportive for commodities overall. Crude oil rose $4.09 after the U.S. strike in Iran and after President Trump said the ceasefire was over. The U.S. also revoked waivers that had authorized Iran oil exports, reinforcing concerns about supply tightness in energy markets. Those moves can boost inflation expectations and influence commodity trading broadly, though the stronger dollar can work in the opposite direction.
Currency effects were also present. The U.S. dollar index rose by $0.087 on Thursday, a change that typically weighs on dollar-denominated commodity demand, especially from buyers facing costs in other currencies.
Trade data and pricing benchmarks
In its monthly foreign trade report, the U.S. Census Bureau data cited 1.46 million bales of cotton exports in May. The figures were described as 15.3% above the prior year and also labeled a 3-year high, though the same summary noted the total was down 6.88% compared with a year-ago basis within the dataset. Investors generally focus on the direction of trend and confirmation of sustained export demand, with any ambiguity in year-over-year comparisons often prompting more scrutiny of the underlying categories.
In market pricing references, the Cotlook A Index increased by 150 points on July 7 to 87.30 cents, according to the article. The Adjusted World Price fell 194 points last week to 61.94 cents per pound, signaling downward pressure in the global reference level even as some regional indicators moved higher.
On the sales pace, the Seam reported 94 bales sold on July 7 at an average of 65.76 cents. For traders tracking physical demand and order flow, weekly sales figures can be an early signal of whether the market’s recent strength is attracting sustained buying.
ICE stock movement and the supply picture
Certified cotton stocks on ICE declined on Tuesday through decertification, with the certified stock level falling to 184,939 bales, down 95 bales. A drop in certified inventory can tighten the nearby supply that is eligible for delivery, which may help explain why futures previously pushed sharply higher.
Even so, Thursday’s declines indicate that traders are still treating the move as a reset rather than a smooth continuation. When stocks tighten but prices are already elevated, investors often watch whether the supply signal persists alongside continued export demand.
Where contracts were trading
- July 26 cotton: 76.94, up 299 points
- Dec 26 cotton: 80.31, down 98 points
- Mar 27 cotton: 81.74, down 94 points
With nearby strength mixed against declines in later contracts, the curve suggests traders are differentiating between near-term tightness and longer-horizon pricing pressures. Oil and the dollar remain immediate cross-currents, while export and stock metrics will likely determine whether the correction extends or reverses.
Going forward, market participants will be watching for follow-through on export momentum from U.S. data, additional developments in the U.S.-Iran situation that could keep energy and risk pricing elevated, and continued signals from ICE stock levels. Additional scheduled data releases and policy signals—particularly those affecting interest-rate expectations and the U.S. dollar—could also steer cotton’s next direction.
