ICE cotton futures continued to rise on Monday. US cotton reached an 11-month high supported by ongoing drought concerns in key US growing regions. Stronger demand signals and weaker US dollar also supported the market, as a weaker dollar made US cotton purchase more attractive for overseas buyers.

The most traded May 2026 contract settled at 71.67 cents per pound, up 0.75 cent or 1.06 per cent. The contract marked the highest level since May 6, 2025. December 2026 contract settled at 75.75 cents with a gain of 0.77 cent. The market is showing strong momentum with third consecutive higher close and 8 gains in the last 9 sessions, indicating sustained bullish trend.

ICE cotton futures climbed to an 11-month high, supported by drought concerns in key US regions and a weaker dollar boosting export appeal.
Strong fund buying and declining certified stocks reinforced bullish sentiment.
Despite moderate export sales, demand outlook remains firm, with any price dips expected to attract active buying interest.

Total trading volume stood at 63,327 contracts, relatively lighter, suggesting controlled but firm buying interest.

A key supportive factor was the 0.2 per cent decline in the US Dollar Index, making American cotton more competitive globally and boosting export demand outlook.

Trade sentiment improved as demand conditions showed signs of recovery, even though export sales pace remained moderate but stable.

Market participants believe any price dips will attract strong buying interest, reflecting underlying strength.

Weather concerns remain critical, with drought conditions persisting in major US cotton-producing regions, especially across the southern belt, raising supply-side risks. USDA’s first Crop Progress Report for the 2026 season showed planting at 5 per cent, in line with the 5-year average and slightly ahead of last year’s 4 per cent. Early sowing has begun in Texas, Arizona, and California, indicating a normal start to the season but weather risks remain.

ICE data showed certified stocks declining to 113,241 bales, down from 114,665 bales, reflecting tightening available deliverable supplies. CFTC positioning data revealed that speculators increased net long positions by 21,606 contracts to 28,743, highlighting strong bullish participation from funds.

In related markets, crude oil prices rose 0.8 per cent, increasing polyester production costs and making cotton a more attractive alternative fibre.

US equity markets gained around 0.5 per cent, supported by optimism over possible ceasefire developments, improving overall risk sentiment. However, Chicago wheat futures declined over 1 per cent due to weak export demand, limiting broader commodity market strength. Broader market direction continues to be influenced by geopolitical tensions, inflation concerns, currency movements, and energy market volatility.

The cotton market is in a strong bullish phase, driven by improving demand outlook, weaker dollar, fund buying, and supply risks from drought and falling stocks. The trend remains firm upward, and any short-term correction is likely to be well supported by active buying interest.

This morning (Indian Standard Time), ICE cotton for May 2026 was traded at 71.67 cents per pound (unchanged), cash cotton at 69.67 cents (up 0.75 cents), the July 2026 contract at 73.94 cents (up 0.10 cent), the October 2026 contract at 75.80 cents (up 0.78 cent), the December 2026 at 75.78 cents (up 0.03 cent) and the March 2027 contract at 76.74 cents (up 0.06 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.

Fibre2Fashion News Desk (KUL)

Global trade is entering a carbon-priced era, where climate policy and market access are increasingly interconnected. The EU’s Carbon Border Adjustment Mechanism (CBAM) exemplifies this shift by placing a measurable carbon cost on emissions-intensive imports and linking competitiveness to verified emissions performance rather than just production cost or scale, according to Ernst & Young (EY). For India, where industrial systems remain largely dependent on coal and energy-intensive processes, this marks a fundamental shift in how exports are priced, verified, and negotiated.

CBAM’s scope directly intersects with India’s trade profile. Steel, aluminium, cement and fertilisers make up most CBAM-covered exports and now face higher landed costs in the EU, closer scrutiny of plant-level data and formal verification at the installation level, said Saunak Saha partner, Climate Change and Sustainability Services at EY India in an article titled ‘How Indian industries are adapting to CBAM and carbon pricing’.

Global trade is entering a carbon-priced era as the EU’s CBAM links market access to verified emissions, according to EY.
For India, this raises export costs in key sectors like steel and aluminium while pushing decarbonisation efforts.
Firms are shifting strategies and markets, while India’s Carbon Credit Trading Scheme aims to internalise costs domestically.

The policy timeline raises the stakes. After a transitional reporting period that began in October 2023, the definitive phase from January 1, 2026, requires importers to purchase CBAM certificates aligned with European Union—Emissions Trading system linked carbon prices. The first annual declaration for 2026 imports—along with certificate surrender—is due on September 30, 2027. For Indian producers, this formalises carbon as an explicit line item in export economics, with downstream product coverage expected to broaden over time.

Importantly, CBAM is also reshaping revenue strategy—not just compliance cost. Exporters that diversify away from concentrated EU exposure toward select Africa, West Asia and Latin America markets can defend or even enhance unit realisations, particularly when paired with credible low-carbon attributes.

The Carbon Credit Trading Scheme (CCTS) anchors a national carbon price in the very sectors that CBAM targets, allowing carbon costs to be internalised at home rather than paid at the EU border. That keeps revenues within India’s fiscal system and enables strategic recycling toward Indian industrial decarbonisation, clean-technology deployment and household welfare protection.

Just as importantly, a credible, rules-based CCTS—underpinned by strong MRV—enhances India’s standing in climate-trade forums and supports arguments for recognising an ‘effectively paid’ domestic carbon price. In practical terms, this reframes CBAM from a unilateral liability into a managed, development-aligned transition tool.

Treat CBAM as a structural signal, not a temporary hurdle. Build verifiable emissions baselines, prioritise technology shifts that cut intensity fastest per rupee invested and craft go-to-market strategies that monetise low-carbon attributes across multiple destinations. With disciplined MRV, targeted capex and a credible domestic carbon market, Indian producers can protect market access, lift realisations and compete in a world where carbon—and proof of reduction — has become part of the price, added the article.

Fibre2Fashion News Desk (SG)

United States Department of Agriculture (USDA) has projected higher cotton sowing area and output in India. In its latest report, USDA’s Foreign Agriculture Service (FAS) has projected 3 per cent higher acreage and 7 per cent higher production in next season 2026-27, which begins on October 1. Higher acreage and production will be driven by expectations of stronger cotton demand, it said.

The USDA said in its report that India’s cotton area is estimated to increase to 11.5 million hectares, up 3 per cent from the previous year, while production is forecast at 25.2 million bales (480 pound or 220 kg), marking a 7 per cent rise. In Indian terms, this translates to around 32.3 million bales of 170 kg, or nearly 5.5 million tonnes.

USDA projects India’s cotton acreage to rise 3 per cent and production 7 per cent in 2026–27, supported by better yields and a normal monsoon.
Domestic consumption is expected to grow on stronger textile exports, while imports decline and exports soften.
Higher stocks and favourable cotton-polyester dynamics signal comfortable supply, despite rising input cost pressures.

The production increase is driven by a recovery from last season’s untimely rains and a projected improvement in yield to 477 kg per hectare, up 3 per cent year on year. A normal monsoon outlook and better crop conditions are expected to further support output.

On the demand side, India’s domestic mill consumption is projected to rise to 25.8 million bales, reflecting improved prospects for textile and apparel exports. Higher demand is also likely to be supported by recent trade agreements with the EU and the UK, which are expected to boost shipments of value-added products.

India’s cotton imports are estimated at 3 million bales, lower than the previous year, as improved domestic availability reduces reliance on overseas purchases. In contrast, exports are forecast to decline to 1.2 million bales, down from the previous year, due to tighter exportable surplus and a strategic shift towards higher-margin textile exports.

Total cotton supply is expected to increase to around 39.3 million bales in next marketing year, supported by higher production and elevated beginning stocks. Ending stocks are projected to rise further to 12.3 million bales, pushing the stock-to-use ratio to about 46 per cent, indicating comfortable availability in the domestic market.

At the same time, rising crude oil prices continue to influence the cotton economy by increasing input costs such as fertilisers and agrochemicals, while also raising polyester fibre prices and improving cotton’s relative competitiveness, the report said.

Overall, the outlook for India’s cotton sector in 2026–27 points to a recovery-driven expansion, with higher acreage, improved yields, and strong domestic demand shaping market dynamics, even as export competitiveness and cost pressures remain key concerns.

Fibre2Fashion News Desk (KUL)