Cotton futures closed lower on Tuesday, with contracts falling between 16 and 55 points as pressure from weaker crude oil prices and a firmer US dollar outweighed signs of tightening certified cotton availability. The latest USDA data also showed US cotton ginnings running below last year’s pace, while crop condition ratings remained weak, particularly in Texas.
The October 2026 Cotton contract closed at 79.69 cents per pound, down 16 points, while December cotton fell 55 points to 82.87 cents. March 2027 cotton declined 51 points to 85.57 cents.
US Cotton Ginnings Lag Last Year’s Pace
USDA’s latest Cotton Ginnings report showed 429,250 running bales of cotton had been ginned by September 15, representing an 8% decline from the same period last year.
The slower ginning pace provides some underlying support to cotton prices by highlighting the possibility of tighter near-term supplies. However, the market remains focused on the eventual size and quality of the 2026 US crop as harvesting activity accelerates.
Weekly Crop Progress data showed US cotton condition ratings at 34% good/excellent, down another 2 percentage points from the previous week. The Brugler500 index also slipped 1 point to 295, while Texas ratings fell by 5 points.
The deterioration in Texas is particularly important because the state remains the largest US cotton-producing region. Continued declines in crop conditions could increase concerns over final yields, although the market still needs to see how harvest results translate into actual production.
Certified Cotton Stocks Continue to Decline
The physical market provided another supportive signal. The Seam reported sales of 769 bales on Monday at an average price of 79.25 cents per pound, while the Cotlook A Index declined 95 points on September 21 to 91.35 cents.
ICE certified cotton stocks fell by another 6,192 bales on September 21, leaving certified inventories at just 29,556 bales.
The decline in certified stocks is potentially supportive for futures because it indicates a tighter pool of deliverable cotton. Nevertheless, this remains only one part of the broader supply-and-demand picture, and weak export demand or improving new-crop availability could limit the impact.
Dollar and Crude Oil Add Pressure
Cotton also faced pressure from broader macroeconomic factors.
Crude oil declined by 57 cents per barrel, while the US Dollar Index gained 0.084 points. A stronger dollar can make US cotton less competitive for international buyers, while lower energy prices can reduce some of the cost pressures associated with agricultural production and transportation.
The combination of a firmer dollar and softer crude prices therefore provided a modest bearish influence during Tuesday’s session.
Cotton Futures Prices
| Contract | Settlement | Daily Change |
|---|---|---|
| October 2026 Cotton | 79.69¢/lb | -16 points |
| December 2026 Cotton | 82.87¢/lb | -55 points |
| March 2027 Cotton | 85.57¢/lb | -51 points |
Bullish Factors
- US cotton ginnings are 8% below last year’s pace.
- US crop conditions remain weak at only 34% good/excellent.
- Texas crop ratings declined another 5 points.
- ICE certified stocks have fallen to 29,556 bales.
- Continued deterioration in crop conditions could create concerns over US yield potential.
Bearish Factors
- Cotton futures closed lower across the board.
- The US dollar strengthened, potentially reducing export competitiveness.
- Crude oil prices declined.
- The Cotlook A Index fell to 91.35 cents per pound.
- The market remains vulnerable to pressure if harvesting confirms sufficient new-crop supply.
Currency Hedger View
Currency Hedger sees the cotton market as fundamentally mixed with a cautious bullish underlying bias, rather than a clear directional breakout.
The strongest supportive signals are coming from declining US crop conditions, slower ginning activity and rapidly falling ICE certified stocks. These factors could become increasingly important if the US harvest produces lower-than-expected yields.
However, the stronger dollar and weaker crude oil prices are working against the market, while futures remain vulnerable to selling pressure if physical supplies increase as harvest progresses.
Near-term sentiment: Neutral to cautiously bullish.
For businesses exposed to cotton purchases or sales in US dollars, movements in USD exchange rates should also be monitored alongside the commodity price, as currency fluctuations can materially alter the effective cost of international cotton transactions.
Currency Hedger provides foreign exchange, international payment and currency-risk solutions for businesses managing cross-border transactions.
Monitor Cotton and Currency Risk
Businesses with cotton-related USD exposure should monitor both cotton futures and the USD exchange rate as harvest data develops. Currency Hedger can assist businesses in managing the FX component of international transactions through currency conversion and hedging solutions.
Today Markets will continue monitoring US crop conditions, ginning figures, certified inventories, export demand and currency movements for further signals on the cotton market.
Market analysis is provided for informational purposes only and does not constitute investment, trading or financial advice. Commodity and foreign exchange markets are volatile and prices can move rapidly.
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