Dollar Strength and Texas Rainfall Weigh on Cotton Prices, ICE Futures Hit Two-Month Low

77.76 cents per pound. That was the settlement for ICE December cotton on October 1, a single-day decline of 0.97%, with the session low marking the weakest level since July 17. The Cotlook A index settled at 89.15 cents/lb, down 30 points. International cotton lost nearly a full percentage point of value at the very start of the Northern Hemisphere harvest window, and the pressure did not come from one source alone. Currency, weather and export rhythm tightened simultaneously.

Currency and Weather: Two Pressure Lines Tightening Together

The US dollar index touched a more than three-month high that day, directly raising the quote threshold for US cotton in overseas markets. Because US cotton is priced in dollars, every notch of currency strength lifts the procurement cost for key import markets such as Turkey, Vietnam and Bangladesh, dampening inquiry appetite. The market read was blunt: the dollar is rising, and that is hurting cotton pricing.

More consequential is the rain in Texas. In the southern region, bolls have already opened, and excessive rainfall during harvest directly damages fiber quality rather than merely affecting yield. That means even if total output holds, the share of deliverable high-grade cotton may shrink. For downstream spinners, tighter expectations for premium cotton are often harder to absorb through blending adjustments than a simple volume swing.

Export Shipments Slip, Demand Signals Soft

USDA export sales data showed that for the week ending September 24, current-crop upland cotton net sales reached 202,567 running bales, down 12% week on week but up 101% from the prior four-week average. Shipments totaled 149,507 running bales, down 9% week on week and 11% below the four-week average. Shipments to China were just 1,323 running bales.

The key figure here is not the sales number but the shipment pace. A 12% weekly decline in sales points to weakening new-order momentum, while shipments running below the four-week average suggest actual outbound flows of already-booked cargo are slowing. The low volume to China reflects still-sluggish cotton textile trade flows between the two countries. For Chinese mills, a slower arrival pace of imported cotton reinforces short-term reliance on Xinjiang cotton and state reserves, but it also reduces the risk of concentrated foreign arrivals pressuring domestic spot prices.

Transmission Through the Chain and the Outlook

A stronger dollar, quality risk in the main growing region and softer export shipments form a short-term bearish alignment. But the drivers need to be separated. Weather is a supply-side disturbance that could, over the medium term, support high-grade prices as premium supply shrinks. Dollar strength is a macro-financial variable that could ease quickly once Treasury yields retreat.

For textile clusters in Keqiao, Shengze and Nantong, mills now face a dual window of lower foreign cotton quotes and volatile RMB exchange rates. Cheaper imported cotton should in theory reduce spinning input costs, but if order books weaken at the same time, cheaper raw material does not automatically translate into better margins.

For Buyers - Watch support around 77 cents on ICE December and lock in Q4 cotton in batches rather than one large position - Verify micronaire and breaking strength for Texas lots, as harvest rain may reduce batch consistency - Compare imported cotton landed cost against Xinjiang cotton and raise the imported ratio when the spread widens

For Exporters - Track the dollar index and Treasury yields closely, as a currency turn often precedes a cotton price rebound - For USD-denominated orders, consider adding exchange-rate fluctuation clauses to avoid settlement losses - Monitor marginal changes in US cotton shipments to China, which typically lead improvements in domestic yarn orders