ICE cotton ends flat but logs fourth straight annual decline

The most active March 2026 cotton futures settled at 64.27 cents per pound, down 0.05 cent. The contract has lost 22 points over the past three days. Cotton posted a weak performance in 2025, with the March 2026 contract down 617 points (-8.8 per cent) over the year. On a year-on-year basis, March 2025 had closed at 68.40 cents on December 31, 2024, while March 2026 closed at 64.27 cents on December 31, 2025. On an annual basis, the contract declined by 413 points (6.0 per cent).

Contract comparison tables show that all futures months declined between December 12, 2023 and December 31, 2024, with net losses ranging from 6.74 cents to 11.16 cents and percentage declines of 8.3 to 14.

Trading volume stood at 32,717 contracts, compared with 37,264 contracts cleared in the previous session.

Market analysts said inconsistent global trade policies continue to hurt long-term demand, while polyester competition and higher production in Brazil and the Southern Hemisphere are weighing on prices. Trade uncertainty and tariff disputes throughout 2025 disrupted export channels and dampened overall market sentiment.

China’s cotton demand has fallen significantly, while domestic production remains very large. According to the National Bureau of Statistics of China, China’s 2025 cotton planting area reached 44.687 million mu, up 5 per cent year on year. Average cotton yield rose to 148.6 kg per mu, an increase of 2.6 per cent from the previous year. Total cotton output in 2025 increased to 6.641 million tons, up 477,000 tons, or 7.7 per cent year on year.

International crude oil prices fell nearly 20 per cent during 2025, reinforcing expectations of oversupply in energy markets. Key factors during the year included geopolitical conflicts, tariff increases, higher production by OPEC+, and sanctions on Russia, Iran and Venezuela.

Lower crude oil prices reduced polyester production costs, making synthetic fibres cheaper and further eroding cotton’s competitiveness.

Analysts expect US cotton production to decline significantly in 2026, which could help rebalance supply and demand and restore profitability.

The US Department of Agriculture, in its December global supply and demand forecast, projected slightly higher US cotton production in 2025-26, lower mill usage and higher ending stocks compared with November.

The USDA export sales report showed net US cotton export sales of 182,700 bales for the week ending December 18, down 40 per cent from the previous week and 2 per cent below the four-week average. Net export sales for the next marketing year increased by 900 bales during the same week.

ICE data showed deliverable No.2 cotton stocks at 11,510 bales as of December 30, down from 11,600 bales the previous trading day.

ICE cotton for March 2026 settled at 64.26 cents per pound (down 0.01 cent), cash cotton at 62.05 cents (down 0.05 cent), the May 2026 contract at 65.61 cents (up 0.01 cent), July 2026 at 66.85 cents (up 0.02 cent), October 2026 at 67.53 cents (down 0.06 cent) and December 2026 at 68.40 cents (up 0.05 cent).

ALCHEMPro News Desk (KUL)