ICE cotton futures settled lower again on September 3, with the December contract closing at 86.45 cents per pound, down 2.79% on the day. This marked the third consecutive session of declines, with cumulative losses approaching 7.7% from the week's high of 93.74 cents—a level not seen since early 2024. Sharp corrections after peaks often signal fragile market sentiment, and this pullback was triggered by weak export data in the USDA's weekly sales report.
Event Background
USDA's export sales report for the week ending August 27 showed net upland cotton sales of only 27,525 bales, a 71% plunge from the previous week's 95,700 bales. Sales to China were negligible at 1,722 bales, while next-season sales were zero. These figures reveal two key signals: first, U.S. cotton export momentum has clearly weakened, particularly with near-stalled sales to China; second, market expectations for new-season demand are becoming cautious.
The export slump is not an isolated event. The broader agricultural complex experienced widespread profit-taking, with Chicago wheat futures falling over 2%. A senior analyst at Price Futures Group noted that this decline is more about macro factors and profit-taking than a fundamental shift. In other words, the rapid price rise had built up speculative long positions, which are now being liquidated, amplifying price swings.
Macro headwinds also played a role. Fed Governor Waller's comments about possible rate stability if inflation eases led to a rally in U.S. equities. Meanwhile, geopolitical risks in the Middle East caused mixed oil prices. These factors influence cotton indirectly through capital flows and risk appetite, making short-term prices increasingly macro-driven.
Industry Impact
For the textile supply chain, this correction means a temporary reduction in raw material costs. Earlier, when prices exceeded 93 cents, many mills postponed purchases due to high prices. Now that prices have fallen to around 86 cents, a window for essential procurement has opened. However, caution is advised—weak export data may signal that downstream demand recovery is not as strong as hoped, and buyers should avoid blindly bargain-hunting.
From a global cotton market perspective, the sharp drop in U.S. export sales is particularly noteworthy. Near-zero sales to China may reflect shifting procurement strategies by Chinese buyers, who now have ample domestic supply and are diversifying import sources, with Brazilian and Australian cotton gaining share. If this trend persists, U.S. cotton price upside will be limited.
In the spot market, the Cotlook A index fell 250 points to 98.25 cents per pound on September 3. The futures-spread remains, but the spot decline is relatively mild, indicating divergent views among traders. For mills relying on imported cotton, the narrowing spread may shift procurement decisions from forward pricing to prompt purchases to lock in current lower spot costs.