On Friday, May 15, cotton futures on the Intercontinental Exchange (ICE) fell by 4%, marking the largest weekly decline since November 2024. The retreat in prices was driven by fading optimism regarding demand prospects.
The most active July cotton futures contract on ICE dropped by 3.33 cents, or 3.97%, settling at 80.61 cents per pound. During the session, it reached its lowest level since April 30. The contract registered a cumulative weekly loss of 4.9%.
A strengthening US dollar exerted downward pressure on dollar-denominated commodities. The US dollar index rose for a fifth consecutive day, marking its longest winning streak since late March, with a weekly gain of approximately 1.5%. A series of economic data released earlier in the week indicated rising inflationary pressures, partly due to continued disruptions in energy supply through the Strait of Hormuz stemming from conflicts involving Iran.
The dollar index, which measures the US currency against a basket of others, increased by 0.32% to 99.27, after climbing to an intraday high of 99.302. A stronger dollar makes cotton, priced in dollars, more expensive for overseas buyers.
In the agricultural commodities market, a lack of significant positive developments on the demand side also weighed on prices. Soybean futures on the Chicago Board of Trade (CBOT) edged lower on Friday, extending sharp losses from the previous session. Corn futures also saw modest declines, as pessimism over export demand overshadowed expectations for increased domestic US demand from corn-based ethanol.
Bob Haberkorn, a senior market strategist at StoneX, commented, "I think the disappointment is that we haven't seen any major developments on the demand side for US agricultural commodities, of which cotton is one. I believe the cotton market will move sideways or lower in the near term."
Further pressure came from a bearish US Department of Agriculture (USDA) export sales report, which indicated weakening US cotton export demand as international purchases became increasingly scarce.
The USDA's export sales report for the week ending May 7 showed that net sales of US upland cotton for the 2025/26 marketing year were only 47,700 bales. This represented a sharp 61% decrease from the previous week and a significant 66% drop from the four-week average, hitting the lowest level for the marketing year. Shipments were also weak, with export shipments for the week at 290,300 bales, down 11% from the prior week and 12% below the four-week average. Major shipment destinations included Vietnam, Turkey, Bangladesh, and China. Shipments to China were only 26,500 bales, a relatively low level for the period.
In related markets, the US dollar index rose. Major US stock indices in New York closed significantly lower. International oil prices posted notable gains.
In the spot market, the Cotlook A Index was at 93.90 cents per pound on the 15th, down 275 points.
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