ICE Cotton Rebounds Above Two-Week Low as Dollar Weakens, Bargain Hunters Step In

At 76.09 cents per pound, ICE cotton futures for December touched a two-week low on June 25, only to close the session at 76.97 cents, up 0.93%. The rebound underscores a solid support level near 76 cents, even as macro headwinds persist.

Dollar Weakness and Oil Linkage

The dollar index retreated on June 25 after three consecutive days of gains, following weaker-than-expected US inflation data that dampened expectations for a Fed rate hike this year. A softer dollar makes dollar-denominated cotton cheaper for overseas buyers, directly boosting its competitiveness.

Meanwhile, crude oil prices jumped over 2% as renewed Middle East tensions—an attack on a vessel off Oman and the suspension of evacuations in the Strait of Hormuz—raised supply concerns. Higher oil prices lift the production cost of polyester, a cotton substitute, indirectly supporting cotton values.

Export Data: Old Crop Slows, New Crop Takes Over

The USDA's weekly export sales report showed net sales of 83,864 bales for the 2024/25 marketing year for the week ending June 18, down 53% from the prior week and 61% below the four-week average. This seasonal slowdown is expected as the old crop season winds down.

More notably, net sales for the 2025/26 crop year reached 67,089 bales, bringing total weekly net sales to 150,953 bales. Shipments to China totaled 12,248 bales, indicating that Chinese buyers remain active on a selective basis. For textile mills, the start of new-crop forward sales means deferred contracts will increasingly reflect production and quality expectations.

Support vs. Risk

Technically, the 76-cent level has attracted consistent buying interest. StoneX analysts noted that speculative funds engaged in technical repositioning and bargain hunting after a sharp selloff the previous day, suggesting the market views current prices as having largely priced in weak demand.

Upside risks remain. Global textile demand is recovering slowly, with US and European retailers showing cautious restocking. Key variables for the coming weeks include US growing conditions, China's import quota policy, and Southeast Asian mill operating rates.

Practical Recommendations

For Buyers - The 76-77 cents/lb range offers a near-term safety margin. Consider layering in forward contracts to lock in costs without chasing highs. - Watch the USDA's July acreage report. A larger-than-expected reduction in planted area could spark a rally. - Non-dollar buyers should accelerate contract signing during the dollar's weakness to lower actual costs.

For Exporters - US cotton shipments to China have held steady at 10,000-15,000 bales per week for three consecutive weeks, indicating stable but not surging demand. Adjust procurement accordingly. - The positive correlation between oil and cotton prices has strengthened recently; include crude oil futures in daily price monitoring. - Geopolitical risks in the Middle East may continue to affect shipping and energy costs. Build freight volatility buffers into quotes.