CT SPECIALIST · Softs / US Supply Fundamentals
Z3404 – [CT] US Cotton Production YoY Signal
USDA PSD US cotton production year-over-year captures systemic US supply shifts and transmits to Cotton forward 60-day returns via the top-exporter supply channel.
At a glance
DORMANT · WAITING FOR JUN
Current reading
+0.336
SEASONAL STATE
DORMANT · WAITING FOR JUN
Signal values ffill forward between USDA PSD annual releases.
Signal state
Production Declining
24 days in Healthy phase
Updated
Nov 04, 2026
USDA PSD release
Sample
36-year window
Annual cadence; 1990 onward
As of Nov 04, 2026. Updated nightly. · NEXT WINDOW JUNE USDA PSD ANNUAL UPDATE
SIGNAL OVERVIEW
The United States is the world’s largest cotton exporter and the second-largest producer. USDA Production Supply and Distribution data tracks US cotton production year-over-year with multi-decade history. Shifts in US production translate directly to global supply balance given the dominant export share; declining US production tightens global supply and supports Cotton futures, while rising production loosens supply. Daily Spearman IC against Cotton forward 60-day returns is plus 0.112 at p-value 1.5e-26 across 8,953 observations, strongly significant on the 36-year sample. Phase plus 1 firings (production declining inverted bullish) deliver plus 0.48 pp above baseline. Phase minus 1 firings deliver minus 0.43 pp. 0.91 pp directional spread with clean monotone phase pattern.
LIVE CHART
CT US Cotton Production YoY Signal
What the chart is showing right now. The dark line is the USDA PSD US cotton production year-over-year z-score inverted and tanh-bounded. Positive composite means US production is declining year-over-year (supply tightening); negative composite means production is rising (supply loosening). The bronze line in the middle panel is ICE US Cotton No. 2 first-nearby. The bottom panel tracks the trailing 252-day Spearman information coefficient between the composite and Cotton forward 60-day returns.
COMPOSITE
+0.336 / tanh
STATE
Production Declining
PHASE
+0.35
PHASE +1 EDGE
+0.48 pp
PHASE -1 EDGE
-0.43 pp
TODAY’S PLAYBOOK READING
STATE
Moderate Pos
STATE AND HISTORY
Production Declining firing at composite +0.336, 24 trading days running in HEALTHY phase. Phase +1 (Production Declining) delivers plus 1.45 percent fwd60d / plus 0.48 pp above plus 0.97 percent baseline. Phase -1 (Production Rising) delivers plus 0.54 percent / minus 0.43 pp below baseline. Daily Spearman IC plus 0.112 at p-value 1.5e-26 strongly significant.
THE US SUPPLY MECHANISM
The United States is the world largest cotton exporter and second-largest producer. USDA PSD tracks US production year-over-year with multi-decade history. Shifts in US production translate directly to global supply balance given the dominant export share; declining US production tightens global supply.
HOW TO POSITION
Directional US supply overlay for Cotton. Production Declining firings flag bullish supply- tightening regimes with Cotton strength following at 60-day horizon. Production Rising firings flag bearish regimes where US supply loosens global balance. Pair with US Cotton Belt DSCI, India GRACE, Xinjiang CHIRPS, and CFTC positioning.
WHAT THE CHART SHOWS
The composite sits at +0.336 in the Production Declining band. USDA PSD US cotton production YoY reading has run below prior-year levels through 2026.
TOP INPUTS FIRING
- Primary composite +0.336 State Production Declining, 24 days running in HEALTHY phase.
- USDA PSD US cotton production declining YoY Raw z-score +0.35; US cotton production has run below prior year through 2026 consistent with supply-tightening regime.
- Daily IC strongly significant, non-overlap not independent Daily Spearman IC plus 0.112 at p-value 1.5e-26 strongly significant on full distribution. Non-overlap IC plus 0.087 at p-value 0.29 not independently significant on 150 samples.
THE TAKEAWAY
What this means for you today
THE PRODUCTION CALL
Composite +0.336, Production Declining. USDA PSD US cotton production YoY reading has run below prior-year levels through 2026. Signal firing in Production Declining bucket for 24 days; forward 60-day edge in Phase +1 historically runs plus 0.48 pp above baseline.
THE EMPIRICAL CONTEXT
Daily IC plus 0.112 at p-value 1.5e-26 strongly significant on 36-year sample. Phase +1 (Production Declining) delivers plus 0.48 pp above baseline; Phase -1 (Production Rising) delivers minus 0.43 pp. 0.91 pp directional spread with clean monotone phase pattern.
THE HONEST CAVEAT
Non-overlap IC at 60-day sampling plus 0.087 at p-value 0.29 not independently significant on 150 samples. Spread is modest at 0.91 pp. USDA PSD annual cadence means composite ffills forward between June releases; the signal is a slow-moving systemic supply anchor rather than a short-horizon trigger.
THE REGIME MAP
The three phases, forward returns and sample share
Computed from 8,953 post-warmup trading days (1990 onward). Baseline Cotton fwd60d mean plus 0.97 percent. Phase +1 (Production Declining) delivers +0.48 pp edge; Phase -1 (Production Rising) delivers -0.43 pp. 0.91 pp directional spread with daily IC plus 0.112 strongly significant.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Production Declining TODAY | +1 | 46.2% (4134 d) | +1.45% | +0.48pp | 2026 (current), 2022-23, 2015 | |
| On Trend | 0 | 14.0% (1253 d) | +0.61% | -0.36pp | various | |
| Production Rising | -1 | 39.8% (3566 d) | +0.54% | -0.43pp | 2018-19, 2010-11, 2004-05 |
The historical pattern
Signature episodes in the 36-year sample
What this measures
Z-score of USDA PSD US cotton production year-over-year percent change on a rolling window, inverted, tanh-bounded. Positive composite equals production declining year-over-year (supply tightening, bullish CT); negative composite equals production rising (supply loosening, bearish CT). Target ICE US Cotton No. 2 first-nearby back-adjusted close.
Why it matters
Why US cotton production matters
The United States is the world largest cotton exporter and the second-largest producer. USDA Production Supply and Distribution data tracks US cotton production year-over-year with multi- decade history. Shifts in US production translate directly to global supply balance given the dominant export share; declining US production tightens global supply and supports Cotton futures while rising production loosens supply. The transmission is slow (annual cadence) but reliable at the systemic level.
How to use this signal today
Directional US supply overlay for Cotton positioning. Production Declining firings flag bullish supply-tightening regimes with Cotton strength historically following at 60-day horizon; Production Rising firings flag bearish regimes. Pair with US Cotton Belt DSCI (short-lead US weather), India Vidarbha plus Gujarat GRACE (India supply), Xinjiang CHIRPS (China supply), and CFTC positioning for stacked global-supply conviction.
Risk overlay
Daily IC strongly significant but non-overlap test plus 0.087 at p-value 0.29 not independently significant on 150 samples. Spread is modest at 0.91 pp. USDA PSD annual cadence means composite ffills forward between June releases; the signal is a slow-moving systemic supply anchor rather than a short-horizon trigger.
Signal consumers and siblings
Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and see the research brief for the full disclaimer.
Last refreshed Nov 06, 2026 09:00 AM ET