Cotton prices tend to reach annual highs in spring as the uncertainty of the global crop and supplies leads to rallies. Cotton reached a record $2.1970 high in March 2011 and a lower $1.5595 per pound peak in May 2022. At below 70 cents per pound in May 2025, the potential for a 2025 cotton rally could be running out of time. 

In my Q1 2025 Barchart recap of soft commodities, I mentioned that market participants should “Keep an eye on cotton, which is at a level that could eventually make the fluffy fiber an attractive candidate to take the bullish baton.” Nearby cotton futures were trading at 66.25 cents per pound in early Q2 after settling at 66.83 cents on March 31, 2025. The July contract was slightly lower in early May as cotton has not taken any bullish batons. 

Cotton remains under pressure

After reaching a record high of $2.1970 per pound in 2011 and a lower peak of $1.5595 in 2022, cotton prices have made lower highs and lower lows. 

The monthly chart highlights cotton’s bearish trading pattern, which took the fluffy fiber futures to a lower 60.80 cents per pound low in April 2025. Cotton prices have steadily declined since February and March 2024, the last time the futures traded over the $1 per pound level. 

The April WASDE report was not bullish for cotton

The U.S. Department of Agriculture’s April World Agricultural Supply and Demand Estimates report, the gold standard for agricultural commodity fundamentals, told the cotton market:

The increase in U.S. and world-ending cotton inventories continues to weigh on prices. 

Cotton could be in the buy zone, but seasonality suggests it could be running out of time

Cotton futures tend to rally during spring, as uncertainty about the annual crop leads to higher prices. In 2011 and 2022, cotton futures reached annual highs in March and May. 

Aside from 2011 and 2022, over the past years, the fiber futures reached yearly peaks from February through July in 2008, 2013, 2014, 2015, 2017, and 2018. The seasonality suggests that cotton futures are running short of time to reflect the seasonal trend in 2025.   

Another year of sideways trading is possible- Tariffs could be the variable

Cotton has been trading in a sideways pattern near the lows in 2025. 

The daily continuous contract chart for 2025 shows a 60.80 to 69.75 cents per pound range since the beginning of this year. 

The monthly continuous contract chart highlights cotton’s rally from the pandemic-inspired 2020 low of 48.35 cents per pound to the 2022 high of $1.5595. Cotton has made lower highs and lower lows over the past four years. While the critical technical support is at the 2020 low, technical resistance is now at the February 2024 high of $1.0380 per pound. 

Based on global inventories in the April WASDE report and the price action in 2025, cotton may have to wait until 2026 to display any upward price momentum. 

ICE cotton futures are the only route for participation in the fluffy fiber

Since the NIB ETF ceased trading in June 2023, the only way to participate in the cotton market is through the futures arena. 

A cotton futures contract contains 50,000 pounds of the fiber. At 68.35 cents per pound, the contract value is $34,175. The ICE exchange’s original margin requirement is $1,771, meaning a market participant can control $32,875 worth of cotton for a 5.2% downpayment. An equity drop below $1,610 per contract requires maintenance margin.

Based on fundamental and technical factors, cotton will likely remain in a narrow trading range over the coming months. As with any agricultural commodity, any sudden change in the weather in the top cotton-growing areas during the 2025 crop year could change the current sideways trading pattern.