Cleveland: Rains Wash Away the Cotton Bulls
June 11, 2026 The rains came and washed all the bullishness away, every last fraction of a penny of it. Not only that, but as July enters its delivery period in just over a week with a seven-year high of certificated stocks, old crop is left facing a trade in the 60’s and almost 20 cents below its two-month ago high. It is not possible, but it is real. The rains came, the Sun came out, and melted Icarus’s wax wings.
Such is the market during the planting season. Of course, beneficial rains have been falling for nearly a month now, and as one would expect, the market has trended lower. We have commented over the past six decades that the market tends to kill the crop two to three times a year during the planting season. Certainly, the 2026 crop was set up for such a slaughter. With significant droughts in Brazil and the U.S., the two countries that supply 60%-65% of the world exports, coupled with world carryover down to 70 million bales, planting season rains drowned speculators who had driven prices 20 cents to the upside, and sent prices back down to 70 cents with fears of facing the 60’s again.
The old crop July settled Tuesday at 71.10 cents after trading to a low of 71.01. Our prior report noted that the market had some support at 76 cents, but 72 cents might be the next objective. Noting that prices slipped slightly below 72 cents could be ammunition to rebuild back slightly, but there is stronger evidence that the 69-cent price objective must be considered. It is dangerous to contend that the price low is in prior to first notice day. The new crop December is the Board leader, and growing season prices will be directed by Mother Nature. December settled Tuesday at 75.30 after slipping to 75.23. The market is a bit skittish given the low world carryover.
The big Indian crop, the world’s second largest, is a domestic use crop. Thus, its moisture deficiency and late development has not been a major factor in price direction. However, as the Indian planting season develops crop development there bears scrutiny as any production shortfall will have to be made up with imports. If India enters the world market wanting to buy cotton for its vast textile industry, the world’s second largest, then bullish price pressure will be evident in higher prices, up to the 81-83 cent level.
While it is difficult not to expect higher prices, the market needs more than expectations. The reality remains that the recent price rally to 88 cents was totally supply-based. Now that supply appears to be adequate, price has again returned its attention to the industry’s primary problem, the one the industry buries its head in the sand over, and the only one that matters, demand. Cotton has not attempted to regain market share, totally ignoring the tastes and preferences of the consumer. The consumer accounts for half of the cotton price formula, and the consumer was abandoned by the cotton industry almost twenty years ago. The demand ball has stopped rolling forward. Remember the slogan, Cotton is the Fabric of your Life? Most do not and in fact, consumers no longer have loyalty to cotton goods. Therefore, the demand side of the cotton price formula is nonexistent, leaving cotton price discovery left to the ongoing production and supply issues. Until the industry decides to address the consumers’ wants, desires, and needs, expressed as tastes and preferences, prices that cover the U.S. cost of production will be hard to find.
USDA will release its June supply demand report tomorrow, Wednesday, June 11. Expectations are that world production will be little changed as any potential drop due to the Indian situation would likely be offset by improved conditions in most other major countries. World consumption is not expected to change, although a reduction is expected soon. The U.S. crop could be estimated as much as a million bales higher, up to 14.3 million bales, but if so, at least 500,000-700,00 bales of that would go to increased exports. Of course, it remains very early in the season and with world carryover low, Mother Nature will show her market strength every month.
Upside potential for December, given current conditions, remains at 80-82 cents with the downside back to only a few hundred points higher than the prior year’s low, or as low as 66 cents.
We will look at the crop across the Belt for the remainder of the week, causing the next report to be midweek. Hopefully, we will see a pretty picture.
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