International Cotton Prices Fall for Fourth Straight Day Under Dual Pressure of Strong Dollar and Plunging Oil

International cotton futures have been under sustained pressure, with ICE cotton falling for four consecutive sessions and the benchmark December contract dropping over 3% in a single day. A stronger US dollar, hitting a 13-month high, and a sharp decline in Brent crude oil prices are the main drags. The market is now focusing on upcoming USDA reports on acreage and exports, which could amplify short-term price volatility.

Background

The most-active December ICE cotton futures contract settled at 76.26 cents per pound, down 2.47 cents or 3.14% from the previous session, and touched an intraday low of 76.15 cents, the weakest since June 15. The nearby July contract also fell, settling at 73.96 cents per pound, down 1.25 cents. This marks the fourth consecutive decline, reflecting a clearly bearish market sentiment.

On the macro front, the US dollar index climbed to 101.8 during the session, a 13-month high, and closed near 101.58, extending gains for a third straight day. A stronger dollar makes dollar-denominated commodities more expensive for buyers holding other currencies, directly dampening international demand for cotton. Meanwhile, global benchmark crude oil prices fell more than $3 per barrel to their lowest level since before the Iran conflict, as more previously stranded tankers departed the Strait of Hormuz, easing supply concerns. Lower oil prices reduce the cost of petrochemical-based fibers like polyester, making them more competitive as substitutes for cotton and further diverting textile raw material demand.

Industry Impact

Cotton prices peaked above 88 cents per pound on May 13 and have since fallen over 13%. For the textile supply chain, the sharp decline in cotton costs eases pressure on downstream procurement budgets in the short term, but it may also intensify a wait-and-see attitude among mills, which tend to delay purchases in anticipation of further price drops.

On the export side, USDA data for the week ending June 11 showed 2025/26 net sales of approximately 177,100 bales, down 15% from the prior week, while actual exports of 251,000 bales fell 16% week-over-week. Export momentum has weakened, consistent with the trend of reduced US cotton competitiveness amid a stronger dollar. The market is now closely watching the USDA's acreage and stocks report due next Tuesday, as well as the weekly export sales data scheduled for Thursday, which will provide clearer direction for near-term price movements.

Practical Recommendations

For Buyers - With cotton prices at a cyclical low but macro uncertainties remaining high, adopt a phased purchasing strategy rather than locking in large volumes at once. - Closely monitor the June 30 USDA acreage report; if acreage exceeds expectations, prices may face further downward pressure, presenting an opportunity to increase procurement. - Track the price spread between polyester staple fiber and cotton; if the spread widens, consider adjusting the raw material mix to lower overall costs.

For Exporters - During a dollar-appreciation cycle, the cost of dollar-denominated cotton imports is relatively stable, but be mindful of exchange rate risks when settling proceeds; consider locking in forward exchange rates. - When quoting export prices, reference the December contract trend; if upcoming reports are bullish, moderately raise forward quotes. - Monitor the impact of Middle East tensions on crude oil prices; sustained low oil prices will suppress cotton demand, so prepare inventory management contingency plans.