Cotton Futures Surge Into Tuesday Morning Session as Markets Shake Off Holiday Sluggishness

The cotton market is displaying robust momentum to start the week, with prices climbing another 40 to 64 points during Tuesday morning trading. This continued upward movement follows Monday’s solid session, when nearby contract months advanced 55 to 64 points as trading activity picked up following the holiday-dampened period.

Supporting Market Conditions Drive Cotton Higher

Energy markets are providing tailwinds for the commodity complex, with crude oil futures recovering $1.08 per barrel to settle at $58.34. Meanwhile, the US dollar index declined $0.113 to $98.045, a softer greenback typically supporting commodity prices denominated in dollars.

Export Activity and Physical Market Signals

The USDA’s Export Sales report released Monday indicated 133,996 running bales of cotton were sold during the week ending December 25. Physical shipments totaled 140,723 running bales, representing a pullback from the previous week’s volume. The Seam’s online auction demonstrated continued demand, with 4,796 bales transacting on January 2 at an average of 57.81 cents per pound.

Positioning Shifts and Technical Benchmarks

Managed money traders reduced their bearish exposure in cotton futures and options according to Commitment of Traders data, cutting 1,368 contracts from net short positions as of last Tuesday, bringing the total to 49,078 contracts. This reduction suggests shifting sentiment among speculative participants.

The Cotlook A Index held steady at 74.30 cents on Friday, while ICE certified cotton inventories remained stable on January 2 at 11,510 bales. The Adjusted World Price was updated to 50.76 cents per pound last week, marking a 74-point increase from the prior week. The LDP rate currently stands at 1.24 cents.

Contract Performance on Tuesday Morning

• Mar 26 Cotton: Closed at 64.65, +64 points, currently up 64 points
• May 26 Cotton: Closed at 65.99, +62 points, currently up 62 points
• Jul 26 Cotton: Closed at 67.31, +59 points, currently up 53 points

The term structure continues to reflect the market’s constructive tone, with front-month contracts outpacing deferred months on a relative basis.