July ICE cotton futures (CTN25) were under modest selling pressure on Wednesday and slipped to a nine-week low below 65 cents a pound. The overall technical posture for the cotton futures market favors the bears as prices are in a seven-week downtrend on the daily bar chart. However, there are also some early, bullish clues that the cotton market has forged a price bottom. 

Since scoring a contract low of 62.05 cents a pound on April 4, July cotton futures have chopped in a sideways trading range. This is likely “basing” action on the daily chart that has put in a price bottom. 

With a price bottom likely in place, the cotton bulls now need some bullish fundamental news to start a price uptrend.

Latest USDA Data Offers Some Price-Friendly Factors

Last week’s monthly USDA supply and demand report had some price-friendly elements for the cotton market. The 2025/26 marketing year U.S. cotton balance sheet was revised to show lower production, beginning stocks, and ending stocks, with consumption, imports, and exports unchanged from last month. 

U.S. harvested area was lowered 2% to 8.19 million acres following extensive rainfall and delayed planting in the Delta. The national average yield for 2025/26 was reduced more than 1% from last month’s report, to 820 pounds per harvested acre, also because of the conditions in the Delta. 

As a result, U.S. cotton production was forecast down 500,000 bales, to 14.0 million, and is below the 14.4 million bales produced in 2024/25 and the second-smallest crop in the past decade. 

Beginning U.S. stocks for the 2025/26 marketing year were reduced 400,000 bales following a corresponding increase in projected U.S. exports for 2024/25. As a result, 2025/26 ending stocks were lowered 900,000 bales to 4.3 million, for a stocks-to-use ratio of 30.3%. 

The projected season-average price for 2025/26 was unchanged in the USDA June report, at 62 cents per pound. 

For the 2025/26 marketing year, USDA forecast downwardly revised global cotton production, consumption, beginning and ending stocks, and world trade. World production was lowered over 800,000 bales as a 1-million-bale increase for China was more than offset by reductions for India, the United States, and Pakistan. Global consumption was reduced by over 300,000 bales for 2025/26.

Beginning world cotton stocks for 2025/26 were lowered over 1.1 million bales, largely reflecting a 1-million-bale reduction in India’s 2024/25 crop. As a result, global ending stocks for 2025/26 were lowered by nearly 1.6 million bales, primarily reflecting the reduction in beginning stocks and a decrease in production that exceeds the decrease in consumption.

USDA Also Offers Bearish China Outlook

USDA’s June supply and demand report also showed the agency forecast 2024/25 China cotton imports at the lowest level in eight years, at 5.5 million bales – roughly one-third of last year’s volume. “Several factors have pressured demand: the highest domestic production in nearly a decade, lower consumption, and less demand for government reserves.”

China’s 2024/25 cotton production is estimated nearly 4.7 million bales higher, at 32.0 million bales, on record yields in the Xinjiang autonomous region. Meanwhile, consumption is projected to fall nearly 2.0 million bales, to 37.0 million.

 At the start of the marketing year, the volume of foreign cotton in bonded warehouses was at the second-highest level for data going back to 2015. Therefore, plentiful supplies coupled with lower operating rates have driven down imports. Chinese companies are shifting production to their Vietnamese mills, spurring greater cotton consumption and imports in Vietnam.

Global Cotton Production Smaller

USDA’s 2025/26 global outlook sees world cotton production forecast down 800,000 bales, to 117.0 million, as smaller crops in India, Pakistan, and the United States more than offset a larger crop in China. Global consumption is forecast down 300,000 bales, to 117.8 million, on lower supplies but remains the highest level in five years. USDA lowered global cotton ending stocks by 1.6 million bales, to 76.8 million, on lower production and beginning stocks in the United States. 

Never Short a Dull Market, and Cotton Has Been the Dullest

There’s an old trading adage: “Never short a dull market.” 

The past five weeks have seen choppy and sideways price action in July cotton futures. The price-bullish basing price action I mentioned above has arisen from the dull market conditions. Still, the cotton market needs a jolt of bullish fundamental news to generate a solid price uptrend. The U.S. stock indexes have been trending up and recently hit multi-month highs. That’s bullish for cotton. The down-trending U.S. Dollar Index and up-trending crude oil prices are bullish “outside-market” factors for the natural fiber. 

However, what the cotton market bulls really needs is a continued thawing in U.S.-China trade relations (China is a major cotton importer) and some drier and hotter weather in U.S. cotton regions — namely Texas. Both elements are entirely possible in the coming weeks.

My bias is that the cotton futures market has put in a major price bottom, but prices will continue to chop sideways until some fresh, bullish fundamental news arises to start a new price uptrend. I think that news will come sooner rather than later.