The cotton market is undergoing a deep adjustment driven by both macro sentiment and supply-demand fundamentals. On June 23, the main Zhengzhou cotton futures contract broke through the key psychological level of 16,000 yuan per ton amid a broad sell-off in commodity markets, closing at 15,905 yuan per ton, down 105 yuan from the previous settlement. This price level is not only a technical support but also directly influences procurement decisions and inventory management strategies across the industry chain.
Macro Pressure: External Transmission and Systemic Risk
The international cotton market is also facing a concentrated release of multiple bearish factors. The main ICE cotton futures contract closed at 78.59 cents per pound on June 23, down 1.03%, weighed down by expectations of ample supply and a stronger US dollar. US cotton planting progress is nearing completion, and the market's outlook for new-crop production has turned optimistic, which will cap upside potential in the medium to long term. Meanwhile, a stronger US dollar further depresses valuations of dollar-denominated commodities, with capital clearly flowing out of the cotton market.
This external decline quickly transmitted to domestic ports. On June 24, imported cotton offers across major ports fell slightly. Based on the 1% tariff conversion, the international cotton price index for SM grade dropped to 14,961 yuan per ton, and for M grade to 14,627 yuan per ton. Notably, the drop in M grade was larger than that in SM grade, reflecting weaker demand for medium-quality cotton. The narrowing domestic-foreign price spread did not, however, stimulate purchasing interest in imported cotton.
Demand Side: Slow Recovery Below Expectations
The performance of the domestic spot market echoes the futures market. The cotton 3128B price index stood at 17,631 yuan per ton, down only 1 yuan, but trading sentiment was subdued. The recovery of orders for textile enterprises has been significantly slower than market expectations, and the problem of finished product inventory accumulation remains unresolved. In this context, downstream procurement is mainly for small batches on demand, lacking the willingness for large-scale stockpiling. This cautious sentiment prevents the spot market from providing effective price support. With weak demand elasticity, cotton prices are more susceptible to macro sentiment.
From an industry chain transmission perspective, cotton prices falling below 16,000 yuan per ton means reduced raw material cost pressure for textile enterprises, but also brings greater uncertainty. For spinning mills, lower raw material prices should theoretically improve profit margins, but if downstream garment and home textile orders remain weak, yarn prices will also come under pressure, making it difficult to realize profit improvement.
Outlook: Waiting for a Catalyst
The core logic currently suppressing cotton prices shows no signs of reversal. The expectation of ample new-crop supply from the US persists, and the macro pressure from a stronger dollar and broad commodity weakness remains. Domestically, the recovery of textile consumption is slow, and demand-side support is insufficient. Zhengzhou cotton, spot markets, and imported cotton are likely to continue their weak, volatile trend, with little rebound momentum.
The industry needs to continuously track three key variables: weather changes in US cotton-growing regions, which could affect new-crop production expectations; whether domestic textile end-user orders can recover before the traditional peak season; and fluctuations in the RMB exchange rate, which impact the cost of imported cotton. Only a new positive driver on the supply or demand side can break the current weakening trend.