On June 23, the main Zhengzhou cotton futures contract closed at 15,905 RMB/ton, down 105 RMB from the previous settlement, breaching the critical psychological threshold of 16,000 RMB/ton. This is not a simple technical correction. On that day, China's commodity market collectively weakened, with the cotton sector under particular pressure, and bearish sentiment in the futures market notably intensified.
For the textile industry, what does this figure mean? 16,000 RMB/ton has been a key reference line for cotton cost accounting over the past year. Once broken, downstream spinning mills will have to revise their raw material cost expectations downward, and order profit models based on higher cotton prices will need restructuring.
Dual Pressure from Domestic and International Markets
Internationally, the main ICE cotton futures contract fell in tandem to 78.59 cents/lb, a daily decline of 1.03%. This drop reflects three overlapping bearish factors: U.S. cotton planting progress nearing completion, leading to a looser supply outlook; a strengthening U.S. dollar depressing valuations of dollar-denominated commodities; and a broad sell-off in global energy, grains, and financial assets, prompting capital outflows from cotton markets.
The external decline quickly transmitted to China's ports. On June 24, imported cotton quotes at major ports edged down across the board. Under a 1% tariff, SM grade cotton landed price was reported at 14,961 RMB/ton, down 0.59 cents/lb; M grade cotton landed price was 14,627 RMB/ton, down 0.72 cents/lb. Notably, M grade declined more than SM grade, suggesting stronger bearish expectations for lower-quality cotton.
The narrowing price gap between domestic and imported cotton failed to boost buying interest, as domestic demand remains weak—downstream orders are recovering slower than expected, finished goods inventories are piling up, and mills are only purchasing small batches on an as-needed basis, lacking bulk buying appetite.
Industrial Transmission: Spot Market Lacks Price Support
The spot market also struggled. The domestic cotton 3128B price index stood at 17,631 RMB/ton, down only 1 RMB, appearing stable but lacking volume support. The core contradiction for downstream textile enterprises is that final order recovery is far slower than expected, leading to high yarn inventories and tight cash flow. Procurement strategies have thus turned extremely conservative—buy only what is needed, avoid stockpiling.
This mentality means that even if futures see a short-term rebound, the spot market will struggle to follow. For cotton traders, the greatest danger is not the price decline itself, but the loss of an anchor for rebound expectations.
Short-Term Outlook: Three Key Variables
The core logic suppressing cotton prices shows no sign of reversal. The U.S. new-crop supply loosening expectation persists, macro pressures from a strong dollar and weak commodities remain, and domestic downstream consumption recovery is sluggish. Zhengzhou cotton, spot, and imported cotton are likely to continue weak and volatile trading.
The industry must track three key variables: U.S. cotton region weather—extreme drought or floods could alter supply expectations; domestic textile final orders—especially restocking pace from European and U.S. markets; and RMB exchange rate trends—directly impacting imported cotton landed costs.
Until new bullish drivers emerge from supply or demand sides, a meaningful rebound is unlikely. For all supply chain players, the current priority is to reduce inventory exposure and shorten procurement cycles, rather than speculate on a bottom.