Cotton Slips from 2-Month High

Cotton futures traded below 82 cents per pound after reaching a more than two-month high of 82.6 cents on August 3rd, as investors took profits following last week's rally and lower crude oil prices weighed on demand. Cotton speculators reduced their net long position by around two thousand contracts, adding to selling pressure. Lower oil prices also made synthetic fibers such as polyester relatively cheaper, reducing cotton's competitiveness. However, downside pressure remained limited by persistent weather-related supply concerns. USDA's weekly crop progress report showed that 42% of US cotton crops were in good condition, compared to 46% a week earlier. In India, below-average monsoon rainfall is forecast to continue through August, threatening crop yields. Meanwhile, in Brazil, cotton production is projected to decline 1.5% in 2027 despite a 4.4% increase in planted area, as El Niño-related dryness is expected to strengthen through September, reducing yields.

Cotton prices hovered near 81 cents per pound after reaching a one-week high on July 23rd, as easing weather concerns dampened expectations of tighter supplies. In India, a revival in monsoon rains accelerated cotton planting, after the having arrived three days late. Following its fifth driest June on record, the country's rainfall deficit narrowed to 16% from nearly 40% at the end of June, as widespread rains in recent weeks helped provide rain-fed irrigation to farmland's, easing fears of a supply shortfall. Meanwhile, lower oil prices weighed on demand, reducing cotton's competitiveness against polyester fibers. However, India's cotton-sown area was still down 4% year-on-year at 9.87 million hectares, reflecting slower planting across several major producing states. In Brazil, growers are expected to reduce cotton planted area by 4% in the 2025/26 season despite record exports in 2024/25, as weaker prices discouraged acreage expansion.

Cotton prices hovered around 80 cents per pound, rebounding toward a one-week high as weather-driven supply concerns outweighed robust Brazilian production outlook. In India, weather remained in focus, with the monsoon bringing the country's fifth-driest June on record and rainfall running nearly 40% below normal. As much of India's farmland still relies on rain-fed irrigation, prolonged dry spells interspersed with intense downpours raised concerns over disrupted summer crop sowing. Meanwhile, as domestic prices approach the minimum support price, increased government procurement reduce available cotton for private buyers, lifting prices. Still, higher crude oil prices improved cotton's competitiveness against synthetic fibres by raising polyester production costs, while expectations of ample global supply persisted as Brazil reported record cotton exports in the 2024/25 season and projected output to increase by a further 13% in 2025/26, limiting further gains in cotton prices.