Cotton Market Breaks Below 16,000: Short-Term Rebound Momentum Dries Up Under Dual Supply-Demand Weakness

The fragility of the cotton market was laid bare on June 23, when the main Zhengzhou Cotton Futures contract broke below the psychological 16,000 yuan/ton barrier, closing at 15,905 yuan/ton—a drop of 105 yuan from the previous settlement. This was not merely a technical correction, but a collapse of bullish confidence under the weight of both macro and industrial pressures.

Macro and Industrial Forces Converge to Break Key Level

The systemic sell-off across commodity markets was the external trigger. Energy, grains, and financial assets all weakened, accelerating capital outflows from risk-sensitive commodities. Cotton, as a typical risk asset, bore the brunt of the deteriorating sentiment. More critically, the anticipated recovery in orders for China's downstream textile mills has failed to materialize. Industry data shows that finished product inventories remain heavily stocked, and mills have shifted entirely to just-in-time, small-batch restocking. Bulk purchasing enthusiasm has hit rock bottom. This means the spot market offers no support for futures prices—the 3128B index edged down just 1 yuan to 17,631 yuan/ton, a price that is more a reflection of thin trading than genuine stability.

Clear Transmission of Bearish External Factors, Imported Cotton Loses Appeal

The international market is equally gloomy. The main ICE cotton contract closed at 78.59 cents/lb, down 1.03% on the day. Three core factors are weighing on the external market: first, the US new crop planting is nearly complete, and market expectations for production are being revised upward, setting a tone of ample supply; second, a strengthening US dollar is directly depressing the valuation of dollar-denominated commodities; third, risk appetite in global financial markets is cooling, prompting capital to flee the cotton market.

The external decline transmitted to China's ports within 24 hours. On June 24, imported cotton quotes across major ports edged lower. The international cotton price index for SM grade fell to 88.92 cents/lb, translating to a landed price of 14,961 yuan/ton (1% duty). The M grade fell to 86.99 cents/lb, with a landed price of 14,627 yuan/ton. Notably, the M grade fell more sharply than the SM grade, narrowing the domestic-import price spread. However, the narrower spread did not stimulate import demand—because downstream demand itself is absent.

Supply-Demand Weakness Solidified; Rebound Awaits New Catalyst

The core logic suppressing cotton prices is clear and robust.

• On the supply side: expectations for a bountiful US new crop are firm, and Brazil's cotton production is also rising, meaning the global cotton stocks-to-use ratio is likely to increase further.
• On the demand side: the recovery in China's textile consumption is slow, European and American markets are cautious about replenishing inventories, and growth in foreign trade orders is limited.
• On the macro front: the strong dollar cycle is not over, commodity markets remain under pressure, and risk appetite is unlikely to reverse in the short term.

Under these three pressures, Zhengzhou futures, spot prices, and imported cotton are likely to continue their weak, oscillating trend. The market lacks even a single clear bullish variable to break the deadlock. Even if a technical rebound occurs, its strength and sustainability are questionable.

Practical Recommendations

For Buyers - Avoid large-scale stockpiling at current levels. Without a tangible recovery in downstream orders, building inventory will only tie up capital and increase risk. - Adopt a "rolling replenishment" strategy, limiting each purchase to 15-20 days of usage. Closely monitor the support level of the main Zhengzhou contract in the 15,500-15,800 yuan/ton range. - Consider using point-price mechanisms to lock in lower-priced forward supplies, but set strict stop-loss limits.

For Foreign Trade Enterprises - A narrowing import price spread does not mean a buying window has opened. Focus on tracking the RMB exchange rate—if the yuan depreciates faster, the cost of imported cotton will rise passively. - Shorten the validity period of export quotations to avoid bearing excessive raw material price volatility during a downtrend. - Monitor weather conditions in US cotton regions—this is the only variable that could disrupt the ample supply outlook. Drought or hurricanes could trigger a phase of external market rebound.