Rain in Texas eases drought, cotton hits six-week low, while a weaker dollar and strong crude oil limit the decline

⑴ Intercontinental Exchange cotton futures hit a six-week low on Tuesday as rainfall in key growing regions of Texas eased drought concerns. However, a weaker US dollar and a rise in international oil prices limited further declines in cotton prices. ⑵ The July cotton contract touched its lowest level since mid-April during the session, before rebounding to close up 0.6% at 77.92 cents per pound. The president of a brokerage firm noted that the damage caused by drought has been significantly alleviated, with ample rainfall over the past two weeks. ⑶ Chicago wheat futures fell for a fourth consecutive day as rainfall in the US growing belt eased drought conditions, while traders prepared for new season harvest supplies in the Northern Hemisphere. ⑷ Another reason for the limited decline in the cotton market was a 0.2% decrease in the US dollar index, which made US dollar-denominated cotton cheaper for buyers holding other currencies; additionally, Brent crude oil rose by over 2%, increasing the production costs of polyester, a petroleum-based substitute. ⑸ Last week, a US Department of Agriculture export sales report showed net sales of upland cotton for the 2025/2026 season at 131,800 bales, a significant increase from the previous week and 16% higher than the four-week average. ⑹ Data from last week showed that net long positions held by speculators in Intercontinental Exchange cotton futures decreased by 10,011 contracts to 69,314 contracts.