Cotton futures recovered slightly on Tuesday as the market attempted to pause recent selling. March cotton traded about 20 points higher ahead of the close at 63.86 cents a pound after struggling to hold onto gains closer to 64 cents.

The USDA’s December WASDE report on Tuesday continued to confirm the bearish bias in the market after showing a more burdensome supply and demand outlook.

The agency raised the U.S. production forecast to 14.27 million bales, up 150,000 from the November report.

On the demand side, domestic cotton milling was reduced by 100,000 bales to 1.6 million, which is the lowest in almost 150 years. U.S. cotton demand depends on exports, largely due to overseas manufacturing in the apparel industry. Cotton exports are forecast to represent nearly 88 percent of total cotton demand for the current 2025/26 marketing year.

With higher production and lower demand, 2025/26 cotton ending stocks were raised to 4.5 million bales, up 200,000 from the previous month. That brought the stocks-to-use ratio to 32.6 percent, representing a burdensome outlook.

Global cotton ending stocks were raised slightly to 75.97 million bales, with a stocks-to-use ratio of 64 percent.

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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.