Cotton Rebounds on Wednesday Morning: Key Price Moves and Market Drivers

Cotton futures are displaying solid momentum as Wednesday trading kicks off, with prices climbing 39 to 48 points after Tuesday’s selloff saw declines of 72 to 84 points across major contract months. The rebound comes as traders digest a complex mix of global and domestic signals shaping the commodity landscape.

Market Headwinds: What’s Dragging on Cotton?

The recent weakness stems from the energy sector, where crude oil futures slipped $1.65 per barrel to close at $55.17. This crude oil pressure has ripple effects across the synthetic market complex. Meanwhile, the US dollar index has strengthened, rising $0.038 to $97.995, which typically adds headwinds to dollar-denominated commodities like cotton that face stiffer export competition.

Current Contract Performance

The action across the key cotton futures contracts tells an interesting morning story:

• Mar 26 Cotton: Closed Tuesday at 63.1 cents, down 84 points, but has recovered 48 points so far this session
• May 26 Cotton: Yesterday’s finish at 64.26 cents represented an 80-point decline, with 45 points recaptured today
• Jul 26 Cotton: Finished Tuesday at 65.38 cents after shedding 72 points, now showing 39 points of gains

Supply and Valuation Signals

Physical market data offers nuance on where traders see value. Monday’s Seam online auction moved 15,641 bales at an average of 59.57 cents per pound—a level that’s informing current trading dynamics. The Cotlook A Index dropped 10 points on December 15, settling at 73.85 cents, reflecting ongoing global pricing pressure.

ICE certified cotton stocks declined by 1,497 bales on December 15, with total certified holdings sitting at 12,474 bales. The Adjusted World Price, last updated last Thursday, came in at 50.39 cents per pound—down 89 points week-over-week—suggesting underlying commodity price deterioration that traders are now attempting to correct.

What’s Next for Cotton?

As morning quotes roll in, the interplay between energy weakness, currency strength, and actual supply fundamentals will likely dictate whether this Wednesday rebound has legs or represents a tactical bounce in a longer downtrend.