Two consecutive weeks of zero net US cotton sales to China is a more alarming signal than the price decline itself. The latest USDA export sales report shows another week of zero net sales to China for the current marketing year, with shipments falling more than a quarter below the four-week average. ICE's most-active December contract settled at 82.87 cents per pound, down 0.66% — a modest move on paper, but the volume and open interest structure already reflect deeper concerns about demand.
Breaking Down the Export Data
Total US upland cotton export sales for the week reached 71,231 bales, down 4% from the prior week and 30% below the four-week average. What stands out is the composition: net sales to China were zero for a second straight week, and China was once among the largest buyers of US cotton. Shipments tell a similar story — 142,076 bales were exported during the week, down 20% week-on-week, with only 2,437 bales heading to China, less than 2% of the total.
What does this mean? The US cotton export engine is shifting from China-driven to Vietnam, Pakistan, and Turkey-driven, but the latter volumes are not yet sufficient to fill the gap. For international merchants, the center of gravity in basis pricing is migrating from Chinese ports to Southeast Asia — a regional shift in pricing power that has already begun.
The Substitution Logic: How Oil Prices Feed Into Cotton
A second thread behind cotton's weakness comes from polyester. Improving Gulf supply prospects — Iran signaling passage through the Strait of Hormuz and Saudi Arabia resuming exports from its Red Sea port — pushed crude oil to a two-week low. Falling oil prices directly reduce PTA and MEG feedstock costs, widening the spread between polyester staple fiber and cotton.
For downstream spinning mills, this spread shift is a tangible signal for recipe adjustments. When polyester staple prices remain below cotton, a tilt toward polyester in blended ratios becomes almost inevitable. Procurement managers in chemical fiber fabric clusters like Keqiao and Shengze typically adjust their cotton blending plans within two to three weeks after the spread crosses a threshold. Cotton's weakening competitiveness is not merely a futures market sentiment issue — it is a substitution process already underway.
Transmission to Industrial Clusters
The Cotlook A Index stood at 93.65 cents per pound, up 230 points, diverging somewhat from the ICE trend. This internal-external price spread structure is unfavorable for domestic textile enterprises: imported cotton costs remain elevated while downstream order quotes are constrained by weak end demand. Clusters such as Nantong home textiles and Foshan knitwear, which rely heavily on cotton as a raw material, face a two-way squeeze between input costs and finished product pricing in the near term.
Notably, rising expectations of Federal Reserve rate hikes further suppress US domestic cotton demand. Higher interest rates increase inventory financing costs for textile companies, reduce brand restocking willingness, and shorten order lead cycles. For traders importing US cotton or exporting to the US, the combined volatility of exchange rates and interest rates may affect the P&L more than cotton price movements themselves.