From 76.09 to 76.97 cents per pound. The ICE cotton futures December contract experienced a classic V-shaped reversal on June 25, hitting its lowest level since June 11 during the session before closing nearly 1% higher. This was not driven by a single factor but by the interplay of three forces—dollar weakness, geopolitical risk, and market sentiment—all converging within a single trading day.
Dollar Weakness: An Instant Switch for Export Competitiveness
The U.S. dollar index finally turned lower after three consecutive days of gains, directly altering the pricing appeal of U.S. cotton in global markets. For buyers holding euros, yen, or renminbi, dollar-denominated U.S. cotton became "cheaper." Industry data shows that the dollar's decline on June 25 was linked to weaker-than-expected U.S. inflation data, which dampened market expectations for a Federal Reserve rate hike this year.
This shift has a direct impact on the textile supply chain: the procurement costs for major cotton-importing countries such as China, Vietnam, and Bangladesh fluctuate accordingly. When the dollar enters a weakening cycle, U.S. cotton's export competitiveness improves temporarily, pushing up international cotton prices and squeezing mills' raw material margins.
Geopolitical Risk Transmission: From Tanker Attack to Cotton Price Anomaly
On the same day, international oil prices rose over 2% due to concerns over a vessel attack near Oman, reigniting fears about disruptions in the Strait of Hormuz. Any disturbance to this energy artery triggers a rapid response in crude prices, and there is a hidden substitution logic between oil and cotton prices—polyester fiber is derived from crude oil, so when oil prices rise and push up chemical fiber costs, demand for cotton as an alternative strengthens, supporting cotton prices.
This means textile companies cannot focus solely on the cotton balance sheet; they must also incorporate Middle East dynamics into their daily risk monitoring. Any development in the Strait of Hormuz can, within 48 hours, affect raw material procurement decisions through the "oil → chemical fiber → cotton" transmission chain.
Market Sentiment and Export Data in a Dual Game
The USDA export sales report released on June 25 showed that for the week ending June 18, net sales of U.S. upland cotton for the current marketing year were 83,864 running bales, down 53% from the previous week and 61% below the four-week average. This data should have pressured cotton prices, but the market chose a "buy the rumor, sell the fact" logic—prices had already fallen to a two-week low, and bargain buyers stepped in.
Analysts at StoneX noted that speculative funds were engaging in technical repositioning after heavy selling the previous day, and that current price levels offer strong support. This indicates that cotton prices are in a sensitive zone of long-short tug-of-war: fundamentals are weak (poor export data), but both capital flows and technical factors suggest upside momentum.
Practical Implications for Chinese Textile Buyers
Short-term cotton price volatility is amplifying uncertainty in fabric costs. For Chinese cotton spinning mills, three variables demand attention: the dollar trend, oil price fluctuations, and the pace of U.S. cotton exports.