At 82.89 cents/lb, the ICE December cotton contract closed nearly flat on September 23, with a gain of just 0.02 cents that is practically negligible. But what should truly alert textile industry participants is not the calm on the screen, but a glaring figure in the USDA export sales report: net sales of US cotton to China stood at zero bales for the week. This is not a one-week anomaly but a continuation of several consecutive weeks of sluggishness. With the procurement window of the world's largest cotton consumer remaining shut, the support logic for international cotton prices is being repriced.
Structural Gap Revealed by Export Data
USDA data for the week ending September 10 shows current-crop US upland cotton export sales netted 71,231 bales, down 4% from the prior week and a sharp 30% below the four-week average. Next-crop net sales were only 6,160 bales, again with no Chinese buying. Zero net sales to China for consecutive weeks means US cotton exports are losing their single largest buyer.
This gap is not a short-term disturbance. Chinese textile enterprises have been continuously adjusting their raw material mix in recent years, with import quota usage becoming more cautious. Combined with a narrowing price spread between domestic and imported cotton, the price competitiveness of US cotton in the Chinese market has clearly weakened. For US cotton exporters, finding alternative buyers has shifted from an option to a necessity.
From a supply chain transmission perspective, blocked US cotton exports will force adjustments in pricing strategies. If Southeast Asia, Turkey and other markets cannot fully absorb the gap left by China, US cotton spot quotes may come under further pressure, which would then transmit to ICE futures. For domestic cotton users, short-term imported cotton procurement costs may have room to decline, but exchange rate fluctuations could erode the actual landed cost.
Macro Factors Pulling in Both Directions
The US dollar index rising to its strongest level in nearly two months is the core macro variable suppressing cotton prices. Since the Federal Reserve raised rates by 25 basis points last week to a range of 3.75%-4.00%, multiple officials have hinted at further tightening if inflation does not cool. A stronger dollar directly raises the cost of dollar-denominated cotton procurement, dampening demand from emerging market buyers.
But oil price movements offer a countervailing signal. On September 23, oil prices rose nearly 4% in volatile trading, with traders assessing both the Iranian president's remarks and Trump's threats. If the oil rebound persists, it could alter the global inflation and monetary policy outlook, thereby weakening the dollar's further upside potential. For the cotton market, this means macro headwinds are not monolithic.
The spot market weakened in tandem. The Cotlook A Index stood at 93.25 cents/lb, down 40 points, echoing the flat futures close. Spot quote softening often precedes futures in reflecting genuine demand weakness, and this signal deserves attention.
Transmission Judgment for the Textile Supply Chain
China's procurement absence is reshaping global cotton trade flows. US cotton exporters are diverting more resources to Vietnam, Bangladesh, Indonesia and other Southeast Asian textile production hubs. The impact on domestic textile enterprises is twofold: on one hand, Southeast Asian mills gain more stable raw material supply and may form stronger cost competitiveness in mid-to-low-end orders; on the other hand, domestic firms turning to Brazilian or Australian cotton must reassess quality stability and logistics cycles.
From a price expectation standpoint, ICE cotton lacks clear direction in the short term. Zero sales to China on the demand side forms a ceiling, while a stronger dollar and rebounding oil create a tug-of-war. If next week's export sales report still shows no Chinese buying, the 82 cents/lb support level will face a test. For traders holding cotton inventory, the current window is better suited for locking in basis rather than betting on direction.