I ask if cotton will recover as seasonal strength approaches in a February 17, 2026, Barchart article, when I concluded with the following:
Cotton offers value at the current price level, but that does not mean prices will not fall to new lows. In April 2020, the global pandemic caused prices to reach a 48.35 low, and in late 2008, they reached 39.23 cents per pound. However, in the current inflationary environment, with production costs rising and the U.S. dollar’s value declining, I believe cotton prices will hold around 60 cents per pound. Commodity cyclicality and seasonality increase the odds of a recovery rally over the coming weeks and months.
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The May ICE cotton futures were trading 64.13 cents per pound on February 13, 2026. While they have not run away on the upside, prices were slightly higher in March.
A tepid rally in cotton futures
After reaching a low of 60.90 cents per pound on February 6, 2026, the continuous cotton futures contract recovered.
The chart highlights the 9% rally that took cotton futures to 66.38 cents per pound high on February 25, 2026. Cotton futures ran out of upside steam at the February 25 high, and were around 64.40 cents per pound on March 9.
Commodity cyclicality and cotton
The U.S. Department of Agriculture released its February World Agricultural Supply and Demand Estimates report on February 10, 2026, and told the cotton market:
Global and ending cotton inventories increased, and the USDA reduced its U.S. mill price by one cent to 60 cents per pound.
The February WASDE was issued before the start of the 2026 crop year and does not account for commodity cyclicality. With cotton trading near the lowest price in six years, producers are likely to curtail output, which often leads to declines in inventory. Consumption tends to increase at low prices, creating the conditions for price bottoms. Meanwhile, weather uncertainty in the critical cotton-growing regions peaks at the start of each crop year.
Limited downside risk with upside potential
The quarterly chart since 1959 shows that while cotton futures are under pressure, they have made higher lows since the Q4 2001 low of 28.20 cents per pound.
Over the past two and a half decades, production costs for all agricultural commodities have increased, and cotton is no exception. While the trend since 2022 remains bearish, the long-term trend since the turn of this century suggests that higher lows and rising production costs could lead to a recovery. At 64 cents per pound, cotton’s price could have limited downside risk and significant upside potential.
Levels to watch in the cotton futures market
The ten-year monthly chart of continuous cotton futures suggests the fluffy fiber futures could be near or at a bottom heading into the 2026 crop year.
Technical support is at the April 2025 low of 60.80 cents per pound. Cotton futures fell to just above that level at 60.90 cents in February 2026. Moreover, cotton futures bounced from the higher low, closing February above 65.60 cents per pound. Technical resistance is at the April 2025 high of 69.75 cents per pound. Any weather disruptions that send cotton above 70 cents per pound would end the technical bearish pattern in place since the May 2022 high of $1.5595 per pound.
Futures are the only route for market participants
Unfortunately, there are no ETFs tracking the ICE cotton futures, leaving futures as the only trading route. Each ICE cotton futures contract contains 50,000 pounds. At 64.40 cents, the contract value is $32,200. ICE’s current original margin is $1,254 per contract. A market participant can control one ICE cotton contract with a 3.9% down payment. If equity falls below $1,140, the exchange requires maintenance margin.
I view cotton as a compelling candidate for low risk and high potential reward in the current environment. The uncertainty of weather during the 2026 planting and growing seasons, rising production costs, commodity cyclicality, and the current price levels favor a recovery rally that could challenge critical technical resistance at 70 cents per pound.
On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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