76.97 cents per pound—that was the settlement price for the ICE cotton futures December contract on June 25, up 0.71 cents or 0.93% from the previous session. Earlier in the day, the contract had dipped to 76.09 cents, the lowest level since June 11. This intraday reversal highlights the intense tug-of-war between bullish and bearish forces in the current cotton market.
Short-term Support from Macros The immediate catalyst for the rebound came from macro factors. The US dollar index retreated after three consecutive days of gains, breaking its recent strength. A weaker dollar makes dollar-denominated cotton relatively cheaper for overseas buyers, partially restoring export competitiveness. Meanwhile, international oil prices rose over 2% on the day, driven by renewed geopolitical risks in the Middle East—a cargo ship was attacked off the coast of Oman, raising concerns about shipping safety through the Strait of Hormuz. Higher oil prices create a linkage effect on cotton, as polyester fiber is derived from crude oil and the two fibers are substitutes.
For textile mills, short-term fluctuations in the dollar index directly affect the cost of imported cotton. If the dollar continues to weaken, imported cotton becomes more attractive, potentially stimulating some buying interest. However, this macro support is inherently temporary—once the dollar regains strength, cotton prices will face renewed pressure.
Persistent Demand-Side Concerns Despite the futures rebound, demand-side signals remain discouraging. The USDA export sales report released on June 25 showed that for the week ending June 18, net sales of upland cotton for the current marketing year were 83,864 bales, down 53% from the previous week and 61% below the prior four-week average. Net sales for the next marketing year totaled 67,089 bales, also lackluster. Shipments for the week were 300,155 bales, up 20% week-over-week but still 16% below the four-week average.
These figures clearly indicate that actual purchasing intentions in the international textile market remain weak. Uncertainty surrounding the pace of global economic recovery and the slow rebound in downstream orders are the core factors constraining cotton demand. For Chinese importers, while current US cotton prices have pulled back, the timing for large-scale replenishment is not yet ripe, given domestic cotton price trends and the recovery status of end-consumer markets.
Industrial Belt Response and Price Expectations Looking at domestic industrial belts, spot market transactions in Xinjiang and the Yellow River cotton regions are sluggish, with downstream mills adopting a hand-to-mouth purchasing strategy and maintaining low raw material inventories. Although operating rates at weaving clusters like Shengze and Keqiao have picked up, new orders are mostly short-term and small-lot, limiting the pace of raw material consumption.
StoneX senior vice president Bailey McHenry noted that the current price level provides strong support, with buyers willing to enter the market at these levels. The presence of bargain-hunting suggests limited downside for cotton prices. However, without a substantial improvement in demand, any rebound is unlikely to develop into a trend. The market is likely to remain in a narrow range, awaiting new catalysts.