80.86 cents per pound—that was the settlement price for ICE cotton's December contract on October 5, a single-day gain of 2.51% that looks robust but masks a harsher reality: over the past month, cotton prices have fallen nearly 16%, touching their lowest level since June 26 just last week. Whether this brief convergence of weather premium and oversold correction can truly alter the market's trajectory depends on the weather window in the US Cotton Belt over the next two weeks and export data.
Rain Disrupts Harvest, but Output Loss Remains Unverified
Persistent rainfall during the boll-opening and harvesting period in the US Southeast has hindered field operations, putting exposed cotton fibers at risk of quality degradation. The latest USDA weekly report shows that as of October 4, the US cotton harvest was only 23% complete, up 6 percentage points from the previous week and slightly above the five-year average of 21%. However, the good-to-excellent rating fell from 35% to 33%, suggesting the rain has already affected crop ratings.
From an industry transmission perspective, harvest delays will push back the new crop's market arrival, providing short-term support for spot basis. But it is worth noting that with only 23% harvested, more than 70% of fields remain unfinished. If rain persists, production-cut expectations could intensify; if the weather clears, the current price premium will quickly erode.
Futures Rebound and Spot Rally: The Linkage Logic
While ICE cotton futures rebounded, the Cotlook A Index stood at 89.35 cents/lb, up 100 points, with the spot market strengthening in tandem. This futures-spot resonance is not surprising after September's slump—speculators cut net long positions by 5,852 lots to 58,601 lots in the week ending September 29, and short covering alongside bargain-hunting buying drove this correction.
However, signals from surrounding markets are mixed: CBOT corn and soybeans rebounded on strong export demand, crude oil fell as Middle East exports increased and the G7 pledged higher supply, and the US dollar index rose. For textile mills, the raw material rebound has not yet formed a trend reversal, and purchasing strategies should not chase the rally.
Impact on China's Textile Supply Chain
US cotton price fluctuations transmit directly to domestic cotton yarn and grey fabric costs. Currently, Chinese textile enterprises face fragmented orders and razor-thin margins. For every 1 cent/lb increase in raw material costs, cotton yarn costs rise by roughly 50-80 yuan/ton. If US cotton continues to rebound, the price advantage of imported yarn will diminish, potentially opening substitution space for domestic yarn.
More noteworthy is downstream acceptance. When cotton prices plunged in September, some weaving mills restocked at low prices, and current inventory levels are not low. If end-user apparel consumption shows no clear recovery, the raw material rebound will struggle to transmit smoothly to grey fabric and面料 prices, intensifying margin pressure in the midstream.