ICE cotton futures recorded a fourth consecutive decline on June 24, with the most-active December contract settling at 76.26 cents per pound, down 2.47 cents or 3.14%, and hitting an intraday low of 76.15 cents—the weakest since June 15. The nearby July contract also fell, closing at 73.96 cents, down 1.25 cents. This marks a sharp reversal from the May 13 peak above 88 cents, representing a drop of over 13% in two months.
Dual External Pressures
The immediate driver of the sell-off came from the macro front. The U.S. dollar index rose for a third straight session, touching 101.8—a 13-month high—before settling at 101.58, up 0.19%. A stronger dollar makes U.S. cotton more expensive for foreign buyers, directly dampening international demand. Kansas-based commodity analyst Sid Love noted that a strong dollar typically weighs on all commodities priced in the currency.
Meanwhile, global crude oil prices plunged more than $3 per barrel to their lowest levels since before the Iran conflict escalation, as previously stranded tankers began departing the Strait of Hormuz, easing supply concerns. Lower oil prices reduce the production cost of polyester, cotton's main synthetic substitute, making it more attractive for textile mills and further undermining near-term cotton demand expectations.
Fundamental Data Weakens
Beyond macro headwinds, cotton's own export data has softened. USDA data for the week ending June 11 showed 2025/26 net sales of 177,100 bales, down 15% from the prior week, while export shipments of 251,000 bales fell 16% week-over-week. Both metrics point to growing caution among international buyers amid current price levels and currency dynamics.
The physical market mirrored the weakness. The Cotlook A index fell 75 points to 87.55 cents per pound on June 24, confirming that the demand slowdown is not limited to speculative futures activity but is transmitting to actual trade.
Key Report Window Approaches
Market attention now shifts to the USDA's acreage and quarterly stocks reports due June 30, which will provide fresh supply-demand balance data. Love suggested prices may find support before June 30 if significant rainfall follows the drought, clarifying new-crop prospects.
Additionally, the USDA will release weekly export sales data on June 26 at 8:30 a.m. EDT. The market will watch to see if the sales decline continues. If export data deteriorates further alongside a bearish stocks report, prices could test recent lows.
Industry Impact
For Chinese textile mills, lower international cotton prices offer short-term raw material cost relief, but the strengthening dollar poses currency risk—imported cotton is dollar-denominated, and renminbi depreciation could partially offset the price decline. Moreover, the narrowing spread between cotton and polyester may accelerate substitution in the coming weeks.