The cotton market is undergoing a deep adjustment driven by a confluence of macroeconomic and industrial factors. On June 23, the main Zhengzhou Cotton futures contract broke through the key psychological threshold of 16,000 yuan per ton, closing at 15,905 yuan per ton, with a single-day drop of 105 yuan. This is not a simple technical breakdown but an inevitable result of the superposition of three pressures: loose supply expectations, a stronger US dollar, and weak domestic demand. For textile companies, this means the raw material procurement window is being redefined, and the bottom of cotton prices has yet to be identified.
A Dual Supply-Demand Weakness Pattern
From the supply side, the US cotton planting season is nearing completion, and the market's upward revision of new season production expectations continues to pressure the market. The main ICE cotton contract closed at 78.59 cents per pound on the same day, down 1.03%, with weakness in external markets directly transmitting to the domestic imported cotton market. On June 24, quotations for imported cotton at major ports fell across the board. The International Cotton Price Index SM grade was converted to a delivery price of 14,961 yuan per ton, and the M grade to 14,627 yuan per ton. The decline was more pronounced for mid-grade M cotton than for high-grade SM cotton, reflecting a more concentrated pessimistic outlook for medium- and low-quality cotton.
Domestic spot market conditions are also far from optimistic. The 3128B price index stood at 17,631 yuan per ton, a modest drop of just 1 yuan. While this appears stable, it conceals underlying risks: the widening spread between spot and futures prices means narrowing arbitrage opportunities, reducing traders' willingness to hold inventory. More critically, the recovery in orders for downstream textile companies has fallen short of expectations, with finished product inventories piling up. Procurement strategies have fully shifted from active stockpiling to demand-based replenishment. This small-volume, low-frequency procurement rhythm cannot provide effective support for spot prices.
Macro Pressure and Industrial Logic in Resonance
The core driver of this decline is not a single industrial factor but the resonance between macro and industrial forces. A stronger US dollar directly depresses the valuation of dollar-denominated commodities, and cotton, as a agricultural product with strong financial attributes, is particularly affected. At the same time, a collective decline in global energy, grain, and financial sectors has led to capital outflows from the cotton market, creating systemic drag. For domestic textile companies, this means additional pressure on imported cotton costs from the exchange rate side, making procurement decisions more cautious.
From the industrial transmission chain, an external decline leads to lower imported cotton quotations and a narrowing of the domestic-international price spread, which theoretically should boost the appeal of imported cotton. However, in reality, the willingness to purchase imported cotton has not increased. The fundamental reason is that the substantial recovery of downstream orders is the decisive variable for procurement volume. The current pace of recovery in end-consumer demand is slow, and the replenishment cycle for apparel brands and retailers has yet to begin, so textile companies dare not expand raw material inventories rashly. This mismatch of 'orders not yet moving, raw materials moving first' has trapped cotton prices in a negative feedback loop where 'the more prices fall, the fewer people buy'.
Short-Term Rebound Unlikely, but Bottom Logic Needs Re-examination
The core logic suppressing cotton prices has yet to show signs of reversal. The loose supply expectation for the new season persists, the trend of a stronger US dollar is unlikely to change in the short term, and domestic consumption recovery still needs time to materialize. The three major markets—Zhengzhou futures, spot, and imported cotton—are likely to continue a weak and volatile trend, with insufficient rebound momentum. However, it is worth noting that after the 16,000 yuan per ton mark was breached, the market has entered a completely new pricing range. Once downstream orders show marginal improvement or weather anomalies occur in US cotton regions, cotton prices may experience a rapid correction.
The industry must continuously track three key variables: the impact of US cotton weather on new season production, marginal changes in domestic textile end-user orders, and the trend of the RMB exchange rate. Any unexpected change in any of these three variables could break the current weak balance.