Wednesday Cotton Rally Signals Market Shift Amid Energy Headwinds

Cotton futures staged a notable rebound on Wednesday morning, with prices bouncing between 39 and 48 points higher as traders digested overnight developments. The reversal follows a sharp selloff the previous day, when the entire complex declined 72 to 84 points across front-month contracts at the close.

Market Drivers Behind the Price Action

The pressure that weighed on cotton yesterday stemmed primarily from weakness in the synthetic market. Crude oil futures posted a significant decline, losing $1.65 per barrel to settle at $55.17, dragging down energy-correlated commodities. Meanwhile, the US dollar index strengthened, climbing $0.038 to $97.995—a combination that typically challenges commodity valuations priced in dollars.

Cotton Contract Updates

Three major cotton futures contracts reflected the week’s volatility:

• March 2026 Cotton: Closed at 63.1 cents/lb after dropping 84 points, now tracking 48 points higher in current sessions
• May 2026 Cotton: Settled at 64.26 cents/lb following an 80-point decline, currently up 45 points
• July 2026 Cotton: Finished at 65.38 cents/lb down 72 points, presently bouncing 39 points

Supporting Market Data

Physical cotton sales through The Seam’s Monday auction moved 15,641 bales at an average of 59.57 cents/lb. The Cotlook A Index retreated 10 points to 73.85 cents as of December 15. ICE certified stocks declined by 1,497 bales, bringing the total certified inventory to 12,474 bales. The Adjusted World Price, updated last Thursday, stands at 50.39 cents/lb—down 89 points from the prior week—suggesting international pressures remain a headwind for domestic valuations.