Cotton Futures Lose Ground Amid Tariff Tensions

Cotton futures are experiencing notable losses as tariff disputes impact market sentiment. The USDA report indicates a decline in cotton commitments, which could signal future pricing challenges.

Date: 05-04-2025

AI Rating: 4

Market Overview: Cotton futures have recently posted losses, with futures for May down 354 points this week, as well as a decrease of 115 to 144 points on Friday. Additionally, the crude oil market is experiencing a $4.63 per barrel decrease, while the US dollar index has strengthened by $0.821. These shifts suggest underlying economic concerns that could impact broader market sentiment.

Tariff Impact: The imposition of a 34% retaliatory tariff by China on US goods could adversely affect US agricultural exports, including cotton. However, Vietnam's contrasting move to cut tariffs to 0 has provided some relief to the cotton market, helping it recover slightly from lows experienced during the session.

Commitment of Traders Report Insights: The CFTC Commitment of Traders report indicates managed money has reduced their net short positions in cotton futures and options by 7,176 contracts. The existing net short position totalling 66,634 contracts underlines ongoing bearish sentiment in the cotton market.

Export Sales Data: Total cotton commitments stand at 10.438 million running bales (RB), reflecting a 4% decline from the previous year. This figure represents 101% of USDA projections, with the average pace reaching 102%. This decline in commitments could foreshadow reduced price support and market volatility going forward.

Price Indices and Stock Levels: The Cotlook A Index slipped to 79.60 cents per pound, while ICE cotton stocks remained unchanged at 14,488 bales. The USDA’s Adjusted World Price (AWP) rose slightly by 158 points to settle at 55.22 cents per pound, indicating some potential support for market pricing.

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