Cotton Futures Surge as Market Rebounds from Holiday Lull

Cotton contracts posted substantial gains across the board on Monday, with nearby futures climbing 55 to 64 points as trading activity picked up following the extended holiday period. The recovery reflected broader commodity market strength, as crude oil futures rallied to $58.34 per barrel, gaining $1.08, while the US dollar index softened to $98.045, down $0.113.

Market Activity and Trading Volume

The USDA’s Export Sales report released Monday morning revealed that 133,996 running bales of cotton found buyers during the week ending December 25. Physical shipments, however, showed signs of cooling, declining to 140,723 running bales from the prior week’s levels. These figures suggest measured demand despite the overall price recovery.

Institutional positioning data painted an interesting picture of market dynamics. Managed money traders reduced their net short exposure in cotton futures and options by 1,368 contracts as of the previous Tuesday, bringing total short positions down to 49,078 contracts. This repositioning may have provided additional upside support to cotton’s Monday rally.

Pricing Indicators and Inventory Levels

The Seam’s online auction recorded 4,796 bales sold on January 2, with an average price point of 57.81 cents per pound. Meanwhile, the Cotlook A Index remained steady at 74.30 cents on Friday, maintaining price stability in spot market assessments. The adjusted world price for cotton moved up 74 points to 50.76 cents per pound from the previous week, indicating strengthening international valuation.

ICE certified cotton inventory levels remained stationary on January 2 at 11,510 bales, providing a stable backdrop for the rally. The LDP rate is currently pegged at 1.24 cents, factoring into producer price support considerations.

Contract Settlement Summary

Cotton’s contract months reflected the upward momentum across the board. March 26 cotton closed at 64.65, up 64 points. May 26 cotton finished at 65.99, advancing 62 points. July 26 cotton settled at 67.31, gaining 59 points. The US cotton rate environment continues to support these multi-month strength patterns, with forward curves maintaining a normal contango structure.