U.S. cotton futures staged a notable rebound on June 11, driven by a broadly bullish USDA supply-demand report. The July contract settled up 1.95% at 72.49 cents/lb, while the more active December contract rose 1.41% to 76.36 cents/lb. This marks a recovery from April 1 lows near 71 cents.
Market Drivers
The USDA June report cut 2026/27 U.S. ending stocks and global supply estimates while raising consumption, signaling a shift toward tighter fundamentals. U.S. export forecast was raised by 200,000 bales to 12.2 million, a level analysts consider achievable. Weekly export sales data reinforced this: net sales for the current season hit 207,032 bales, up 12% week-on-week and 60% above the four-week average. New-crop sales added another 298,689 bales.
However, net sales to China fell by 5,494 bales, and shipments to China were only 6,601 bales, indicating muted Chinese buying interest at current prices.
Supply Constraints
Brazil’s Conab cut its 2025/26 cotton output estimate to 3.9784 million tons, down 2.5% year-on-year, despite a slight increase in yield. As the world’s second-largest exporter, Brazil’s lower production will reduce global tradeable supplies, potentially lifting import costs for countries like China, Vietnam, and Bangladesh in the coming year.
Headwinds
Despite the bullish report, a stronger U.S. dollar, weak grain markets, and lower oil prices after President Trump canceled a strike on Iran capped gains. ICE deliverable stocks fell to 192,789 bales from 231,683 a day earlier, easing delivery pressure but not enough to trigger a breakout.
Practical Advice
The current rally appears driven more by short-covering and technical support than genuine demand recovery. Mills and traders should hedge against a potential pullback.