Cotton Holds Steady

Cotton prices traded near 87 cents per pound, remaining around the same level after easing from a more than two-month high, as traders locked in profits and assessed demand and supply conditions. The latest WASDE report showed that the demand outlook remained unchanged, while production forecasts were revised 3% lower. Additionally, for the week ending September 8th, crop conditions worsened, with only 34% of US cotton crops rated good or excellent. The El Niño phenomenon is expected to persist through February 2027, potentially affecting crops across key producing regions. In India, below-average monsoon rainfall remains a concern after August precipitation came in 16% below normal, particularly as nearly half of the country’s farmland lacks irrigation. In contrast, the USDA’s weekly export sales report showed shipments of 73.9 hundred, rebounding after two consecutive weeks of declines.

Cotton futures fell below $0.87 per pound, easing from a more than two-year high as traders took profits following the recent rally driven by concerns over tighter supply. The latest USDA crop progress report showed 39% of US cotton crops rated good or excellent, improving from 37% the previous week, easing some supply concerns. Additionally, export sales declined for the second week. In Brazil, intense heat and severe drought accelerated harvesting, with 88.7% of the crop harvested. However, weather risks remain significant. The El Niño phenomenon is expected to persist through February 2027, potentially affecting crops across key producing regions. In India, below-average monsoon rainfall remains a concern after August precipitation came in 16% below normal, particularly given that nearly half of the country’s farmland lacks irrigation. Meanwhile, heavy rainfall in West Texas linked to Cyclone Eduardo is threatening yields, adding to uncertainty over the global cotton supply outlook.

Cotton futures rose above 90 cents per pound, remaining near a more than two-year high as adverse weather continued to threaten crops. High temperatures and heavy rainfall are damaging crops across key growing regions, while the persistent El Niño phenomenon continues to affect commodity markets. In China, deteriorating crop quality and yield losses could boost demand for imports, including from the US. Meanwhile, US crop conditions continued to worsen, with the USDA’s latest crop progress report showing only 37% of crops rated good to excellent, down from 38% previously. India’s position in the Chinese yarn market has also strengthened, with its share of Chinese yarn imports rising to 21% from 7%, as shipments from the US and Brazil were delayed amid the Middle East conflict and tight fuel supply. However, India is facing its weakest monsoon in nearly two decades, with rainfall expected to finish the season around 15% below the long-term average, posing further risks to cotton output.