Cotton Futures at Near 2-Year Highs

Cotton futures traded around 80 cents per pound, the highest since May 2024, mainly supported by strong speculative buying and tightening supply perceptions. The US harvest remains under threat from a severe drought in Texas, the main producing state, potentially the worst in a decade or two, with only 11% of cotton planted so far. Meanwhile, Brazil is expanding its role in global trade, posting record cotton exports for March and breaking the typical end-of-year shipment pattern. The market has also been influenced by geopolitical tensions, which have pushed up oil prices and, in turn, supported cotton by making synthetic fibers more expensive. At the same time, ongoing disruptions to maritime routes have increased shipping delays and raised freight and insurance costs.

Cotton futures traded around 79 cents per pound, near the highest since May 2024, on the back of higher oil prices, which increase polyester production costs and boost cotton’s appeal as an alternative fiber. Meanwhile, drought persists in the United States, particularly in Texas, the main producing state, with planting already underway. Meanwhile, Brazil is expanding its role in global trade, posting record cotton exports for March and breaking the typical end-of-year shipment pattern. Secex data showed exports rose 45% year-on-year to 347,822.83 tonnes, compared with around 239,000 tonnes last year. In the meantime, the USDA, in its April WASDE report, raised its global cotton production forecast for 2025–26 by 900,000 bales, on higher output from China, India, and Pakistan, while also increasing consumption by 560,000 bales. The US supply and demand outlook was left unchanged.

Cotton futures traded above 73 cents per pound, reaching the highest since June 2024, helped by the dollar weakness and elevated oil prices amid continued restrictions in the Strait of Hormuz. High oil prices increase polyester production costs and indirectly support cotton demand as an alternative fiber. Ongoing drought concerns in key US cotton growing regions, particularly US western and southwestern Great Plains, also supported the market. Meanwhile, the USDA in its April WASDE report increased global cotton production forecast for 2025-26 by 900,000 bales, primarily on higher output from China, India, and Pakistan, and raised consumption by 560,000 bales. The US supply and demand outlook was left unchanged.