Is Cotton Preparing to Take Off on the Upside?

Core Viewpoint - Cotton prices are currently seen as offering value, with expectations of holding around 60 cents per pound despite potential for further declines due to rising production costs and a weakening U.S. dollar [1] Price Trends - May ICE cotton futures were trading at 64.13 cents per pound on February 13, 2026, showing slight increases in March [2] - A recovery in cotton futures occurred after reaching a low of 60.90 cents per pound on February 6, 2026 [3] - Cotton futures experienced a 9% rally, reaching a high of 66.38 cents per pound on February 25, 2026, but subsequently fell to around 64.40 cents per pound by March 9 [4] Supply and Demand Dynamics - The USDA's February World Agricultural Supply and Demand Estimates report indicated an increase in global and ending cotton inventories, with a reduction in the U.S. mill price to 60 cents per pound [6] - The February WASDE report did not account for commodity cyclicality, and with cotton prices near six-year lows, producers are likely to reduce output, which may lead to declining inventories and increased consumption at lower prices [7] Long-term Outlook - Historical data shows that cotton futures have made higher lows since the Q4 2001 low of 28.20 cents per pound, indicating limited downside risk with potential for upside [8] - Over the past 25 years, production costs for agricultural commodities, including cotton, have risen, suggesting that despite a bearish trend since 2022, the long-term outlook may favor recovery due to higher lows and rising production costs [9]