82.89 cents per pound. That was the settlement price of ICE cotton's December contract on September 23, up a mere 0.02 cent. More telling than the sideways move is the fact that US upland cotton net sales to China stayed at zero for yet another week. Prices held, but orders did not arrive. This divergence between price and volume is the real tone of today's cotton market.
Structural Signals in Export Data
The latest USDA weekly export sales report showed net upland cotton sales of 71,231 bales, down 4% from the prior week and 30% below the four-week average. More critically, net sales to China registered zero for both the current and next marketing years. The incremental demand for US cotton is coming almost entirely from Vietnam, Pakistan, Turkey and other substitute markets.
For Chinese mills, this is not simply a question of whether to buy US cotton. Sliding-scale duty quotas, the price gap between domestic and imported cotton, and Xinjiang's self-sufficiency jointly determine procurement direction. When US cotton sales to China hit zero, it signals that the cost-performance window for imported cotton has not opened, and domestic spinners prefer to draw down local stocks.
The Cotlook A Index stood at 93.25 cents per pound on September 22, down 40 points, echoing the futures market. Softer spot quotes reflect traders' stronger willingness to sell rather than any recovery in end demand.
Currency and Rate Pressure
The macro backdrop is capping cotton's upside. After the Federal Reserve raised rates by 25 basis points to a 3.75%-4.00% range last week, several officials hinted at further tightening if inflation does not cool. The dollar index climbed to its strongest level in nearly two months, making dollar-denominated cotton more expensive for buyers holding other currencies.
Oil prices rose nearly 4% in choppy trading, with geopolitical factors lifting energy costs. In theory, stronger oil lifts synthetic fiber costs and indirectly supports cotton, but that transmission chain is currently severed by the strong dollar.
For export-oriented textile firms, currency volatility affects margins more than cotton prices themselves. A stronger dollar means dollar-denominated orders convert into fewer yuan, while imported cotton costs rise. Both ends squeeze.
How Industrial Belts Are Reacting
Fabric clusters such as Keqiao and Shengze are more sensitive to raw material swings than upstream players. With cotton prices moving sideways, weaving mills are reluctant to restock, favoring small-batch, quick-turn strategies to avoid inventory buildup. The Nantong home textile sector, buoyed by stable domestic orders, is largely unresponsive to short-term cotton fluctuations.
Notably, if US cotton sales to China remain at zero, international merchants may cut quotes to compete for Southeast Asian markets, pulling down the global cotton price center. That could benefit domestic spinners, but only if quota policy cooperates.
Whether demand improves ultimately depends on end-market apparel retail. The market expects weekly sales reports to improve, but expectations alone do not constitute orders.