Main points
- Cotton prices have risen due to the war in Iran and rising oil prices, which are affecting synthetic fibers.
- Investors have returned to long positions, and the textile industry in Asia is increasing the share of cotton amid rising raw material prices.
Cotton is becoming more expensive worldwide / Photo Unsplash
The global cotton market is showing rapid growth amid rising oil prices due to the Iran war. Investors have already changed their strategy and returned to bullish bets.
Expensive oil shifts the balance in favor of cotton
Interest in cotton has increased on the global raw materials market as rising oil prices raise the cost of synthetic fibers, Bloomberg reports. This primarily concerns polyester and nylon, which are directly dependent on petroleum products.
According to the US Commodity Futures Trading Commission, investors moved into net long positions for the first time in a long time: the number of contracts to buy exceeded sales by 16,825. This was a turnaround after a year of dominance of “bearish” sentiment.
An additional driver of growth was increased demand from the textile industry, especially in Asia. Due to the rising cost of raw materials for synthetics, fabric manufacturers are increasingly increasing the proportion of cotton in their products.
Crop risks support prices
The rise in cotton prices is also being driven by fundamental factors. Rising fertilizer prices, driven by geopolitical tensions, could reduce the area under cultivation and lower future yields.
According to Cotlook analysts, the global cotton market could face a deficit of about 295,000 tons in the 2026-2027 season. Additional uncertainty is created by drought in the main producing regions of the United States.
Cotton prices have risen by about 22% since the conflict began, approaching two-year highs. Experts believe that even if the oil market stabilizes, cotton will remain strong due to structural changes in demand.
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