The global cotton market faced a wave of selling pressure on February 17, 2026, as ICE cotton futures tumbled to new lows amidst a broader retreat in the commodity sector. Lacking strong internal drivers, the natural fiber was caught in a cross-current of a strengthening US dollar and a massive sell-off in precious metals. The benchmark March contract shed 0.50 cent to settle at 62.67 cents per pound, while the May 2026 contract closed at 64.40 cents, marking a widespread decline that left no contract untouched.
The primary catalyst for the downturn was the surging US dollar, which rose against all major currencies, effectively making American cotton more expensive and less competitive for international buyers. This currency strength was further bolstered by the recent nomination of Kevin Warsh as the next Federal Reserve Chairman. Markets view Warsh as a hawkish pick likely to favor tighter monetary policy and a reduced Fed balance sheet, a combination that historically strengthens the greenback.
Adding to the bearish sentiment, the "risk-off" mood in global markets was intensified by a sharp decline in gold and silver. As the CME increased margin requirements for metals, the resulting sell-off spilled over into other commodities, including soybean, wheat, and corn. "Cotton is being dragged lower by metals because it currently lacks its own fundamental support," noted one market analyst, highlighting how the fiber has become a passenger to broader macro-driven shifts away from physical commodities.
Energy markets also played a significant role in the price drop. Crude oil prices fell by more than $3 after President Trump indicated that Iran was in "serious talks" with Washington, significantly easing geopolitical tensions in the Middle East. For the textile industry, cheaper oil is a double-edged sword; while it lowers transportation costs, it also reduces the price of polyester—cotton's main synthetic competitor—putting further downward pressure on the natural fiber.
Despite the price drop, trading activity was exceptionally high, with nearly 95,000 contracts changing hands. Open interest surged for the 14th consecutive day to a record 372,796 contracts, a clear signal of fresh short positions being built. While US manufacturing returned to growth in January despite rising tariff costs, that strength has ironically served to boost the dollar further, leaving cotton producers to navigate a challenging pricing environment as they head into the 2026 planting season.