Cotton Market Faces Headwinds as Prices Pull Back Through the Week

The cotton futures complex ended the week on a softer note, with most nearby contracts surrendering 10 to 15 basis points during the session. March contract weakness was particularly notable, sliding 10 points over the weekly period. This pullback occurred amid broader commodity pressure, as crude oil retreated 9 cents to settle at $57.51 per barrel, while the US dollar index strengthened by 0.061 points to 98.405.

Spec Fund Activity and CFTC Data

Market participants watching speculative positioning received updated information through a delayed CFTC report covering the week ending 11/18. The report indicated that spec funds trimmed their net short positions by 2,086 contracts, bringing the total short exposure down to 58,243 contracts. This reduction in short spec positioning offered some indication of shifting market sentiment within the futures complex.

Physical Market and Pricing Benchmarks

On the cash side, Thursday’s electronic auction through The Seam reflected modest activity, with 13,615 bales changing hands at an average level of 60.93 cents per pound. The Cotlook A Index showed strength relative to the futures weakness, rebounding 25 points to 74.20 cents as of 12/11.

The Adjusted World Price benchmark was marked down 89 points from the previous week, settling at 50.39 cents per pound following the Thursday update. Meanwhile, ICE certified cotton inventories remained stable on December 11, maintaining a certified stocks balance of 13,971 bales.

Contract Settlement Overview

Contract closings reflected the week’s bearish undertone. The March 26 contract finished at 63.83, declining 14 points from the prior week’s level. May 26 cotton dropped 14 points as well to close at 64.91, while the July 26 contract eased 13 points to end at 65.94. The relative consistency in point declines across the contract curve suggests broad-based softness rather than localized weakness in any particular delivery month.