Cotton Market Faces Headwinds as Prices Fall

Cotton futures saw another week of decline, with December contracts reaching a low of 77.26 cents per pound, according to Cotton Grower. While the July contract remained above 80 cents, the overall market trend points towards weakness.

"The cotton on-call statistics fail to support any bullish attitude for the market," says Dr. O.A. Cleveland of Cotton Grower. This bearish sentiment is fueled by several factors, including:

Weakening Demand: Global economic concerns and declining real wages are expected to dampen consumer spending on apparel, impacting cotton demand.

Large Upcoming Harvest: The South Texas crop shows promise of high yields, potentially driving prices down further. However, weather conditions in the coming months will be crucial.

International Factors: The International Monetary Fund's warnings about U.S. debt pose additional threats to global economic stability, potentially impacting cotton demand.

Despite the bearish outlook, there are some mild supporting factors. China is likely to continue buying U.S. cotton due to lower production costs compared to domestic production.

The next 45-60 days will be critical as the market monitors weather conditions and global economic developments, says Cleveland. World cotton production in the coming weeks will significantly impact market activity. While the July contract might reach 84 cents, the mid-to-high 70s appear to be the more likely trading range for the near future.