82.87 cents per pound. That was the settlement price for ICE December cotton on September 22, down 0.66% in a single session. But the more alarming figure lies beneath the headline: zero net sales to China for the week. As the world's largest cotton consumer and importer, China's absence from the US cotton order book signals that a critical cylinder in the export engine is misfiring.
Breaking Down the Export Data
USDA's export sales report showed that for the week ending September 10, US upland cotton net sales reached 71,231 bales for the current marketing year, down 4% from the prior week and a sharp 30% below the four-week average. More critically, net sales to China stood at zero bales, and forward-year net sales to China were also zero. Shipments painted a similar picture: 142,076 bales were exported, down 20% week-on-week and 26% below the four-week average, with only 2,437 bales shipped to China.
The industrial implication is straightforward: US cotton is losing procurement momentum from its largest buyer. For domestic textile mills, the near-term effect could be tightening imported cotton supply expectations, potentially pushing up bonded warehouse quotes. Over the medium term, if sales to China remain sluggish, US exporters may be forced to lower basis levels to compete for other markets, which would reprice the spread between domestic and international cotton.
Dual Pressure from Substitutes and Macro
Demand-side weakness is not cotton's only problem. Oil prices fell to a two-week low as Gulf supply prospects improved—Iran hinted at possibly reopening the Strait of Hormuz within seven days, and Saudi Arabia was set to resume exports from its Red Sea port at Yanbu. Lower oil prices directly reduce polyester production costs. As polyester staple fiber is the primary substitute for cotton in spinning, any widening of its price advantage will tilt mills' fiber blending ratios toward synthetic materials.
The macro backdrop is equally unfriendly. The Federal Reserve raised rates and signaled further hikes ahead, intensifying demand concerns. StoneX senior market strategist Daniel Pavilonis noted that export sales fell roughly 30% and continued to slide week-on-week, partly due to rate-hike expectations. His assessment: with weak export sales, cotton prices are unlikely to gain significant upward traction.
Divergence Between Futures and Spot
One signal worth noting: futures fell while spot prices rose. The Cotlook A Index stood at 93.65 cents/lb on September 22, up 230 points. Such futures-spot divergence typically indicates tight near-term availability or sellers holding firm on quotes. For buyers, the futures decline offers a pricing window, but firm spot levels limit actual negotiating room.
Looking at industrial belt reactions, domestic spinning mills remain largely on the sidelines. Imported cotton's price advantage is not pronounced, and downstream order recovery is slow, keeping mill restocking appetite weak. On the trading side, bonded warehouse inventory digestion is moderate, with some holders beginning to consider re-export or quote adjustments.
Outlook
Short-term cotton prices are likely to remain in a weak, range-bound pattern. Export sales data is the core variable—if next week's report still shows zero sales to China, ICE cotton could test the 80 cents/lb support level. Conversely, if Chinese buying returns alongside stabilizing oil prices, a corrective rebound is possible.
For all links in the supply chain, managing price volatility risk is paramount. With futures trading at a discount to spot, hedging windows are relatively favorable for both mills and traders. Meanwhile, close attention should be paid to the polyester-cotton spread; once it widens to the substitution threshold, blending plans need timely adjustment.