The dual pressures of a strengthening dollar and collapsing oil prices are reshaping the pricing logic of global textile raw materials. On June 24, ICE cotton futures fell for a fourth consecutive session, with the active December contract settling at 76.26 cents per pound, down 3.14% on the day, hitting an intraday low of 76.15 cents per pound, the lowest since June 15. The nearby July contract also fell 1.66% to close at 73.96 cents per pound. This decline is not an isolated event but the result of a confluence of macroeconomic and industry-specific factors.
Macro Pressure: Dollar at 13-Month High, Oil at Pre-Iran-Conflict Lows
The US dollar index surged to 101.8 during trading on June 24, its highest since May 12, 2025, closing up 0.19% at 101.58. This strength is driven by growing market expectations of a Fed rate hike this year, alongside safe-haven inflows triggered by a tech stock sell-off. For the textile industry, a stronger dollar makes US cotton priced in dollars more expensive internationally, directly dampening overseas buyers' willingness to purchase. Kansas-based commodity analyst Sid Love noted that a strong dollar puts pressure on all commodities by raising the cost for foreign buyers to purchase US goods.
At the same time, Brent crude oil fell more than $3 on the day to its lowest level since before the Iran conflict began. The trigger was the departure of previously stranded tankers from the Strait of Hormuz, easing supply concerns. But the deeper impact on cotton is that lower oil prices reduce the production cost of polyester, the main synthetic substitute for cotton. As polyester becomes cheaper, textile mills may adjust their blend ratios, reducing cotton usage and further pressuring cotton prices.
Fundamentals Under Pressure: Export Data Weakens, Market Awaits Key USDA Report
Beyond macro factors, cotton's own fundamentals offer little support. USDA data for the week ending June 11 showed 2025/26 net sales of 177,100 bales, down 15% from the previous week, and export shipments of 251,000 bales, down 16%. The consecutive decline in export data confirms the weakness in overseas demand amid high prices and a strong dollar.
The market is now closely watching the USDA's acreage and stocks report due on June 30, which will be key to determining next season's supply-demand balance. Analyst Love believes that before June 30, with heavy rainfall in drought-hit areas and uncertainty over new crop prospects, cotton prices may find some support. However, if the report shows acreage exceeding expectations or high inventories, further downside cannot be ruled out. Additionally, the USDA will release weekly export sales data on June 26, providing fresh trading cues.
Supply Chain Transmission: From Futures to Spot, Cost Logic Is Shifting
The consecutive decline in futures is starting to transmit to the spot market. On June 24, the Cotlook A index fell 75 points to 87.55 cents per pound. Although the spot decline is smaller than futures, the direction is clear. For Chinese textile mills, this means the window for importing cotton may be opening. The ICE benchmark contract has fallen more than 13% from its May 13 high above 88 cents to around 76 cents. If the June 30 USDA report does not bring unexpected bearish news, prices may find strong support around 75 cents, making it a price-fixing opportunity worth watching.
Meanwhile, lower polyester raw material costs are putting new competitive pressure on chemical fiber mills. If oil prices stay low, polyester chip and staple fiber prices may continue to fall, further squeezing cotton's market share. Textile mills should closely monitor the cotton-polyester spread and adjust raw material ratios accordingly when taking orders.