Hedge Funds Flip Bullish on Cotton Amid Rising Oil Prices

Money managers have abandoned a two-year bearish trend in the cotton market, pivoting to net-bullish positions as global energy volatility reshapes the textile industry's cost structure. The shift is primarily attributed to the surge in crude oil prices stemming from the ongoing conflict in Iran. Because synthetic fibers are petroleum-based, rising oil costs make natural cotton a more attractive and cost-competitive alternative for manufacturers. According to the latest data from the US Commodity Futures Trading Commission (CFTC), long positions exceeded short positions by 16,825 contracts for the week ending April 14. This marks a definitive reversal from a sustained net-short posture that had persisted since April 2024. This repositioning suggests that hedge funds are betting on a sustained price increase for natural fibers. As long as geopolitical instability continues to support high energy prices, the relative value of cotton over synthetics is expected to remain a key driver for the commodity's price action.