Strong Dollar Pressures US Cotton Rate, Creates Market Friction

InfraVibes · 2026-02-06T06:16:20+00:00

The cotton market showed mixed trends as a strong US Dollar pressured prices, despite robust export demand. Warehouse inventories rose, impacting market dynamics, while futures reflected divided sentiment among traders about short- and long-term prospects.

InfraVibes

2026-02-06 06:16:20

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The cotton market experienced a mixed Thursday session as the stronger US Dollar Index advanced 595 points, creating headwinds for price movements. Treasuries rallied on cooler-than-expected PPI data, which compressed interest rates and intensified the dollar’s upward pressure on commodity valuations. In this environment, cotton spreads showed divergent trends, with new crop positions gaining modest ground against old crop holdings, posting net changes ranging from -39 to +15 points.

Export Demand Remains Robust Despite Dollar Headwinds

Weekly export sales data underscored persistent global demand even as the US cotton rate faced currency pressure. Old crop bookings totaled 177,144 running bales in the week ending June 6, extending total commitments to 12.543 million RB. However, a concerning undercurrent emerged: outstanding sales reached 3.26 million RB with only 8 weeks remaining in the marketing year, creating a potential logistical crunch. Shipments for the period reached 186,645 RB—a 3-week high—suggesting exporters are accelerating deliveries to meet year-end obligations. New crop forward sales jumped to 177,381 RB, marking the largest weekly volume of new crop bookings recorded so far this season.

Warehouse Inventories Signal Building Pressure

ICE certified cotton stocks expanded by 2,689 bales to reach 137,209 total bales as of June 11, with 418 new decertifications logged and 4,151 bales awaiting classification. This accumulation of warehouse inventory typically exerts downward pressure on prices and suggests the market is shifting from supply tightness to relative abundance. The Cotlook A Index climbed 75 points to 82.70 cents/lb on June 12, while the USDA Average World Price declined to 57.32 cents per pound—a drop of 0.81 cents for the week.

Futures Market Reflects Divided Sentiment

Nearby cotton futures illustrated the complexity facing the US cotton rate. July 2024 contracts settled at 71.35, down 39 points, while December 2024 cotton closed at 71.79, up 14 points. March 2025 cotton futures advanced 15 points to 73.31, reflecting traders’ view that longer-dated contracts offered better value amid near-term dollar-driven volatility. This futures curve structure demonstrates market participants remain cautious about near-term momentum while positioning for longer-term cotton demand recovery.

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