Cotton Futures Slip

Cotton futures dropped over 4% to near 83.3 cents per pound, the lowest in a week, as traders weighed the lack of agricultural announcements from the US-China summit and signs of weakening demand. The latest US weekly export sales report showed net sales of Upland cotton totaling 47,700 running bales for 2025/26, a marketing-year low, down from 61% in the previous week and 66% from the prior four-week average. Meanwhile, the USDA’s May WASDE report showed that the 2025/26 global balance sheet was revised upward, with higher estimates for production, consumption, and both beginning and ending stocks. Global production was raised nearly 1% to 122.6 million bales, with the 2026/27 production seen at 116.04 million bales. US all-cotton production for 2025/26 was reduced by 21,000 bales to 13.90 million, while 2026/27 output was projected at 13.30 million bales.

Cotton futures rose above 87 cents per pound in mid-May, moving closer to a more than two-year high, supported by a WASDE report pointing to a tighter supply outlook. The USDA left 2025/26 cotton yield unchanged at 852 lbs per acre and projected production at 13.9 million bales, while old-crop ending stocks were steady at 4.4 million bales. Looking ahead, 2026/27 production was estimated lower at 13.3 million bales, with ending stocks projected to fall to 3.9 million bales, signaling a tighter balance sheet. Meanwhile, US planting progress stood at 29% as of May 10, slightly ahead of the five-year average of 28%, suggesting broadly normal field conditions and limiting additional upside momentum in the near term. Elsewhere, markets are monitoring US weather conditions, with Texas, the main cotton belt, remaining mostly dry, which could reduce yield potential and reinforce expectations of tighter supply.

Cotton futures traded around 86.6 cents per pound, holding close to the highest since April 2024, mainly supported by elevated oil prices amid ongoing geopolitical tensions. Higher crude oil prices push up polyester production costs, making cotton a more attractive substitute and thereby supporting cotton demand. Meanwhile, attention remains on weather conditions in key US growing regions. Texas, the main cotton belt, continues to experience dry conditions, although isolated rain showers are expected across parts of the Delta and Southeast cotton-growing areas. Elsewhere, Brazilian cotton exports jumped nearly 55% year-on-year to 370,400 tons in April, the highest volume ever recorded for the month, which normally sees lower volumes due to the off-season, reflecting the country's growing role as a global supplier.