Related: An Active Broad Commodity ETF to Navigate Changing Markets

Cotton prices are sensitive to economic data since demand is tied to consumer spending on basic items like apparel, bed sheets and towels. The dollar remains an issue for commodities ETFs, particularly amid intensifying speculation that the Federal Reserve could raise interest rates for a third time later this year.

“Bearish traders have been in control of the Cotton market for much of the month of June, as prospects for an increase in global production have kept pressure on prices. The USDA is forecasting 2017-18 global production at 114.7 million bales, up 8.7 million bales from last season. Here in the U.S., the USDA is forecasting Cotton production at 19.2 million bales which, if accurate, would be an increase of approximately 2 million bales. While on the surface it appears that the fundamentals tend to skew towards lower Cotton prices this year, Mother Nature may have other ideas,” according to OptionsExpress.

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