FX.co ★ Cotton Futures Edge Higher

Cotton futures have inched up to approximately 64.5 cents per pound, driven primarily by a weaker dollar and technical market support. Investors and analysts are closely anticipating the upcoming federal weekly sales report for further insight into demand trends, especially amidst the backdrop of ongoing geopolitical unrest. The latest USDA report for January underscored an increase in cotton demand against a backdrop of tightening supply conditions anticipated for the 2025/26 season. Worldwide consumption has risen by over 300,000 bales, propelled by heightened demand in China, although decreases in Turkey and Nicaragua have partially offset these gains. On the production front, global output is projected to decline by more than 350,000 bales, with declines in India, the US, Argentina, and Turkey overshadowing a 1 million-bale increase in China. In the United States specifically, production forecasts have been reduced by over 2%, now estimated at 13.9 million bales, largely due to diminished yields in the Delta region.