Cotton Futures Commitments of Traders - Week Ending 2026-05-29

Executive summary

This report covers positioning in ICE Cotton No. 2 futures for the week ending May 29, 2026. Speculative participants, primarily Managed Money, trimmed their significant net long position, indicating a slight reduction in bullish conviction. This was driven by long liquidation rather than new short selling. Conversely, Commercials (Producers/Merchants) actively reduced their large net short position by covering shorts. Despite these flows, the market structure remains classically divided: speculators are heavily net long while commercials are heavily net short. Open interest saw a marginal increase, suggesting new capital entered the market, and concentration on the short side remains notable.

Positioning (net, extremes vs recent weeks)

• Managed Money: Net position stands at +55,284 contracts long. This is a reduction from the prior week's +59,665 contracts but remains near the highest levels seen in the provided historical data, which stretches back to late 2025 when this category was net short.
• Producers/Merchants (Commercials): Net position is -128,593 contracts short. While still an extremely large net short, this is the smallest short position held by this category in over a month, down from a peak of -143,537 on May 15th.
• Swap Dealers: Net position is +31,842 contracts long, a very slight decrease from the prior week's +32,093 contracts. This group continues to hold a substantial long position, likely offsetting commercial hedging activity.

Flows and week-over-week changes

The reporting week saw a net reduction in the primary speculative vs. commercial positioning divergence. - Managed Money: This category was a net seller of 4,381 contracts. The change was driven by a significant reduction in long positions (-5,428 contracts) partially offset by a smaller reduction in short positions (-1,047 contracts). This points to profit-taking or risk reduction on the long side. - Producers/Merchants: Commercials were significant net buyers, reducing their net short position by 7,045 contracts. This was primarily achieved through aggressive short covering (shorts decreased by 5,386 contracts), with a modest addition of new longs (+1,659 contracts). - Swap Dealers: Showed minimal change, with a net position reduction of just 251 contracts.

Commercials vs speculators

The fundamental positioning conflict persists. Speculators are positioned for higher prices, while physical hedgers are protecting against a price decline. - Speculators (Managed Money): With a net long of +55,284 contracts, funds remain overwhelmingly bullish. However, the liquidation of over 5,400 long contracts this week is a key development, suggesting a potential peak in bullish sentiment or a simple risk-off move. The number of long-only Managed Money traders is 86, versus only 30 on the short side, further highlighting the bullish skew. - Commercials (Producers/Merchants): The -128,593 contract net short position represents extensive producer hedging. The fact that they covered over 5,300 short contracts this week could signal that physical selling pressure is easing at current price levels.

Open interest and participation

• Open Interest: Total open interest increased slightly by 1,859 contracts to 331,157. This rise, concurrent with a reduction in the net spec long, suggests that new positions from other categories (like Other Reportables) absorbed the spec selling. Overall OI remains below the 2026 peak of over 380,000 contracts seen in February.
• Concentration: The market shows significant concentration on the short side. The largest four traders hold a net short position equivalent to 26.0% of total open interest, and the largest eight traders hold 35.2%. This is much higher than the long-side concentration (7.2% and 12.4% respectively), underscoring the influence of large-scale commercial hedgers.

Price context

Price series data was not provided for this reporting period. Therefore, a direct correlation of positioning changes with recent price action cannot be made.

Risks and watchpoints

• Crowded Speculative Long: The Managed Money net long position, while trimmed this week, remains historically large. This constitutes a significant risk of further long liquidation if the bullish narrative weakens, which could accelerate any price declines.
• Commercial Short Covering: The large-scale short covering from Producers/Merchants is a key watchpoint. If this trend continues, it would remove a major source of selling pressure and provide strong support for the market.
• Watchpoint: The primary focus for next week will be to see if Managed Money continues to liquidate their long positions or if this week's flow was a one-off consolidation. A continued reduction in the spec long alongside a shrinking commercial short would suggest a near-term top may be forming.