The most-active December 2026 ICE cotton contract settled 34 points lower at 78.52 cents per pound on Wednesday. It traded between 79.60 cents and 78.11 cents during the session, an intraday range of around 149 points.
The contract had settled at 78.86 cents on Tuesday after a 400-point limit-down move. Wednesday’s settlement was also 11 points below Tuesday’s synthetic settlement of around 78.63 cents, showing that immediate price momentum remained weak.
From its contract-high close of 93.14 cents on August 31, December cotton has now fallen 14.62 cents, or around 15.7 per cent. The decline has taken the contract back into an important July price zone.
Other ICE cotton contracts were also broadly lower, with most months declining by 16–43 points. March 2027, May 2027 and July 2027 also remained below their previous synthetic settlements, showing that selling pressure extended across the futures curve.
Trading volume stood at 83,351 contracts, lower than Tuesday’s 112,170 contracts but still exceptionally high. Tuesday’s volume was the highest since June 11.
Open interest increased by 2,590 contracts on Tuesday to a new all-time high of 389,494 contracts. The rise in open interest alongside falling prices may indicate fresh positioning and increased short-side participation, although price and open-interest data alone cannot conclusively confirm fresh short build-up.
Cotton has experienced exceptionally high open interest during 2026, and the total is now close to 390,000 contracts. Such heavy positioning could amplify price swings if a major fundamental trigger emerges.
US harvest developments remained a key bearish influence. According to USDA data for the week ended September 27, 70 per cent of the US cotton crop had bolls open, up five percentage points from the previous week, four points above last year and three points ahead of the five-year average.
Harvesting was 17 per cent complete, around two percentage points ahead of the normal pace. Crop conditions were rated 12 per cent very poor, 23 per cent poor, 30 per cent fair, 29 per cent good and 6 per cent excellent. The combined good-to-excellent rating improved slightly to 35 per cent from 34 per cent a week earlier.
As harvesting advances, particularly in Texas and the Southwest, expectations of higher physical cotton availability are adding seasonal pressure to futures.
Market commentary has also linked the recent decline to long liquidation and month-end and quarter-end portfolio adjustments. A stronger US dollar has added pressure by making US cotton relatively more expensive for overseas buyers.
Weak crude oil prices have offered little support either. Lower energy prices can improve the relative cost competitiveness of synthetic fibres, particularly polyester, compared with cotton.
ICE-certified cotton stocks remained relatively low at around 28,064 bales. Low certified stocks are potentially supportive for the market, but their influence has so far been overshadowed by futures selling.
China also introduced an important supply-side development, with China National Cotton Reserves Corporation suspending 2026 State Reserve cotton sales from September 30.
The suspension means that regular additional cotton supplies from reserve auctions will no longer enter the domestic market, shifting attention towards actual Chinese mill demand, commercial buying and imports.
Zhengzhou cotton futures were also weak, with the January contract around 15,615 yuan (~$2,324) per tonne and May around 15,635 yuan (~$2,327) per tonne, indicating that bearish sentiment remained evident in both ICE and Chinese markets.
A sizeable divergence persisted between physical cotton benchmarks and futures. The Cotlook A Index was around 93.35 cents per pound, compared with the December ICE settlement of 78.52 cents, leaving a gap of roughly 14.8 cents.
The current market therefore reflects contrasting signals. Physical benchmarks remain well above ICE prices and certified stocks are low, while futures are being pressured by harvest expectations, liquidation and heavy positioning.
This morning (Indian Standard Time), December 2026 cotton was trading at 78.27 cents per pound (down 0.27 cent). Cash cotton was traded at 76.27 cents (unchanged), while the October 2026 contract traded at 74.79 cents (unchanged). The March 2027 contract was at 81.20 cents (down 0.18 cent), May 2027 at 82.83 cents (down 0.25 cent), and July 2027 at 83.29 cents (down 0.24 cent).