Cotton Futures Extend Pre-Holiday Rally as Market Consolidates

gas_fee_therapist · 2025-12-31T15:56:21+00:00

Cotton commodity prices are rising ahead of the holidays, with gains across various contracts, despite a 14% drop in export commitments. Crude oil's stability supports the rally, though managed money positioning shows uncertainty. Inventory tightens, while auction activity remains moderate.

gas_fee_therapist

2025-12-31 15:56:21

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Cotton commodity prices are maintaining their recent momentum heading into the holiday break, with March, May, and July contracts all posting solid gains. The March 26 contract has advanced 17 basis points to 73.18, while May futures climbed 25 points reaching 65.45, and July continued higher at 66.51 following a 24-point increase.

Energy Markets Support Commodity Rally

Supporting the broader commodity complex, crude oil remains elevated at $58.52 per barrel, up another 15 cents on the session. The US dollar index has strengthened to $97.620, gaining $0.007 and reflecting typical year-end currency positioning ahead of market closures on Thursday and early termination Tuesday.

Export Sales Miss Market Expectations

The export picture for cotton presents a more cautious scenario. As of the week ending December 11, export commitments reached 6.183 million running bales—a notable 14% decline compared to the same period last year. More concerning, current sales pace sits at just 54% of USDA projections and trails the typical 72% average seasonal pattern. This shortfall could signal softening overseas demand heading into 2026.

Managed Money Positioning Shifts Modestly

The Commodity Futures Trading Commission’s latest Commitment of Traders report revealed managed money traders added only 180 contracts to their net short stance in cotton futures and options during the week ending December 16, bringing total short positioning to 54,833 contracts. The restrained activity suggests uncertainty among large speculators regarding near-term price direction.

ICE Inventory Tightens, Spot Prices Soften

Physical cotton inventory dynamics continue tightening, with ICE certified stocks declining 796 bales through decertification, settling at 11,600 bales. The Cotlook A Index, a key benchmark for global cotton pricing, retreated 20 points to 73.50 cents on December 23. The Adjusted World Price fell more sharply, dropping 40 points week-over-week to 49.99 cents per pound, indicating downward pressure in international spot markets.

Auction Activity Shows Moderate Interest

The Seam’s December 23 online auction processed 24,874 bales at an average realized price of 59.80 cents per pound, suggesting a balanced bid-ask environment for physical cotton deliveries during the holiday transition period.

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