Market Performance in a Complex Landscape

As the week drew to a close, the cotton market witnessed a surge in prices, with only a couple of contracts from ’25 showing a different trajectory. Most contracts enjoyed gains of 3 to 59 points, with the front-month contracts leading the charge. The surge in cotton prices contrasted with the volatile session of crude oil futures, which closed up 46 cents following a significant drop from the overnight highs. Reports of suspected Israeli strikes in Iran, in retaliation for an Iranian attack over the weekend on Israel, added a layer of complexity to the market dynamics. However, Iran’s response, downplaying the attacks and hinting at no retaliatory action, injected a dose of uncertainty into the market sentiment.

Shifting Positions: Commitment of Traders Data

Recent Commitment of Traders data highlighted a remarkable development – a substantial exodus of managed money long positions in cotton futures and options during the week ending on 4/16. A total of 25,890 contracts were shed, marking the most significant bearish movement in a single week since the commencement of the CFTC data series in 2006. This massive sell-off drove the net long position down to a mere 36,142 contracts, reflecting a significant shift in market sentiment and investor positioning.

Inventory and Pricing Trends

The rise in ICE certified cotton stocks continued, with an additional 3,351 bales reported on April 18, bringing the total to 176,083 bales. Conversely, the Cotlook A Index experienced a decline of 160 points, settling at 87.35 cents/lb on April 18. Additionally, the AWP (Adjusted World Price) saw a drop of 325 points, closing at 62.18 on the previous day and remaining valid through the following Thursday, signaling ongoing fluctuations in pricing dynamics amidst changing market conditions.

Closing Figures

At the close of the market, key cotton contracts showed varying degrees of positive movement:

• May 24 Cotton closed at 78.69, up 59 points
• Jul 24 Cotton closed at 81.02, up 41 points
• Dec 24 Cotton closed at 77.55, up 14 points

On the date of publication, Alan Brugler did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.