US Cotton Price Faces Pressure Amid Trade Deal Developments

US cotton prices have come under selling pressure in recent trading, reflecting broader commodity market dynamics and shifting geopolitical trade conditions. Cotton futures contracts have declined between 14 to 18 points at midday, pulling back from their earlier session lows. This modest pullback follows a significant policy announcement that’s reshaping market expectations for cotton demand from one of America’s largest historical buyers.

Market Backdrop: Commodity Complex Under Pressure

The weakness in US cotton price extends across the broader commodity complex today. Crude oil futures have retreated $3.39 per barrel to $61.82, while the US dollar index has climbed to $97.500, gaining $0.641 on the session. These moves in energy and currency markets are creating headwinds for cotton and other agricultural commodities, as a stronger dollar typically pressures dollar-denominated export prices.

Trade Dynamics: US-India Agreement Reshapes Cotton Outlook

A major development impacting market sentiment came with news of the US-India trade negotiations. The announcement detailed tariff reductions on Indian goods from 25% to 18%, coupled with India’s commitment to purchase over $500 billion in US energy, technology, agricultural, coal, and other products. This agreement is particularly significant for US cotton, as India has historically ranked among the top eight buyers of American cotton supplies.

While the tariff reduction might appear supportive of trade flows, the market’s initial reaction suggests traders are assessing the broader implications for cotton pricing and competitive dynamics. The substantial purchase commitment from India could normalize trade patterns but also reflects current price levels that may already be factored into market expectations.

Market Data: Trading Activity and Positioning

Recent trading activity provides insight into market positioning around US cotton price levels. The Commitment of Traders report released on Friday showed managed money traders adding 13,077 contracts to their net short position as of late January, bringing total short exposure to 65,029 contracts. This expansion of bearish positioning indicates traders expect further downside pressure or are hedging against price rallies.

The Seam’s online cotton auction showed sales executed at 56.571 cents per pound across 4,462 bales, providing a reference point for physical cotton transactions. The Cotlook A Index, a key international benchmark, declined 20 points to 73.95 cents, signaling softness in global cotton valuations.

Inventory and Pricing Metrics

ICE-certified cotton stocks increased by 25,666 bales, with total certified inventory levels standing at 34,226 bales. The Adjusted World Price was updated to 50.23 cents per pound, representing a 76-point decline from the previous week and reflecting the downward pressure on US cotton price levels.

Contract-specific pricing tells the story of near-term weakness across the cotton futures curve:

• March 2026 cotton: 63.02 cents per pound (down 15 points)
• May 2026 cotton: 64.76 cents per pound (down 17 points)
• July 2026 cotton: 66.41 cents per pound (down 14 points)

Looking Ahead: Market Implications for Cotton

The recent developments present a complex picture for cotton market participants. While the US-India trade agreement could support longer-term demand for American agricultural products, the near-term reaction in US cotton price suggests the market is weighing multiple factors, including inventory builds, managed money positioning, and macroeconomic headwinds from currency strength. Traders monitoring cotton will likely watch for further policy developments and changes in speculative positioning that could influence price direction going forward.

Disclosure: This article is for informational purposes only and represents analysis of commodity market data and events. Information is sourced from official exchange reports and public announcements.