US Cotton Market Pulls Back Amid Seasonal Weakness

The US cotton market faced significant selling pressure in late February, with futures contracts declining sharply across key delivery months. This pullback reflects typical seasonal patterns in the commodity complex, with weakness spreading across multiple market indicators. Understanding the recent price action and export dynamics provides insight into current US cotton market sentiment.

Weekly Export Sales Show Sharp Decline

Export data released in late February revealed a more cautious buying environment for US cotton. Sales totaled 253,229 running bales during the week ending February 19, marking a sharp pullback of 45.69% compared to the previous week and falling 18.95% below the same week last year. The decline suggests moderating demand pressure despite ongoing international interest.

Bangladesh led the purchasing with 70,700 bales, while India followed with 59,700 running bales. Meanwhile, actual shipments improved from the prior week, climbing 11.81% to reach 193,005 running bales. Vietnam emerged as the top destination for weekly shipments with 74,200 bales, with Pakistan receiving 21,300 running bales. This bifurcation between lower sales volumes and rising shipments indicates buyers may be working through existing inventory rather than placing new orders.

Cotton Futures Contracts Settle Lower

The US cotton market saw futures contracts retreat across the board, with nearby contracts down 70 to 85 points on the day. Mar 26 Cotton finished at 63.36, declining 81 points, while May 26 Cotton settled at 65.36, also down 81 points. Jul 26 Cotton fell less dramatically at 67.07, down 73 points from the prior session. The consistent weakness across contract months reflects broad-based selling pressure affecting the entire US cotton market.

Supporting the broader commodity weakness, crude oil futures added just 4 cents per barrel to close at $65.46, while the US dollar index climbed $0.100 to $97.725. A stronger dollar typically pressures commodities priced in the US currency.

Market Indicators Paint Mixed Picture

The Cotlook A Index rebounded 30 points on Tuesday to reach 75.85 cents, providing some modest support to sentiment. However, The Seam recorded modest trading activity with 10,891 bales selling on February 25 at an average of 60.73 cents per pound.

ICE certified cotton stocks remained stable on February 24 at 119,457 bales, showing neither supply anxiety nor excess inventory concerns. The Adjusted World Price was raised modestly by 1.79 cents to 51.84 cents per pound, suggesting some international price floor support despite the weakness in US cotton market futures.

The combination of lower export sales, declining futures prices, and mixed indicator signals underscores the current cautious outlook for the US cotton market heading into March.