The cotton market is undergoing a silent price restructuring. On June 23, the main Zhengzhou cotton futures contract broke through the key psychological level of 16,000 yuan per ton, closing at 15,905 yuan, down 105 yuan from the previous settlement. This is not just a numerical breach but signals a substantive shift in market expectations for supply and demand.
The decline was not isolated. The domestic commodity market weakened collectively, with the cotton sector falling sharply and bearish sentiment concentrated. Spot market was equally weak, with the 3128B price index at 17,631 yuan per ton, down only 1 yuan, but trading was thin. Downstream textile enterprises' order recovery is much slower than expected, finished goods inventories pile up, and procurement has shifted entirely to "small batches on demand," with bulk purchasing intentions nearly disappearing.
International bearish factors are more concentrated. US cotton planting is near completion, and market expectations for new season production are leaning toward ample supply, putting long-term pressure on prices. A stronger US dollar further depressed dollar-denominated commodity valuations, compounded by systemic selling in energy, grains, and financial sectors, causing capital to continuously exit the cotton market. On June 23, the main ICE cotton futures contract closed at 78.59 cents per pound, down 1.03%.
The decline quickly transmitted to domestic ports. On June 24, import cotton quotes at main ports fell across the board: SM grade converted to delivery price at 14,961 yuan per ton, M grade at 14,627 yuan per ton. Notably, the decline in mid-grade M cotton was larger than high-grade SM, narrowing the domestic-import spread, but the attractiveness of import cotton did not increase.
The impact of Zhengzhou cotton breaking 16,000 extends far beyond futures accounts. For upstream ginners, 16,000 yuan per ton is a cost psychological line; breaching it sharply increases new cotton procurement risk, forcing some to suspend purchases or lower seed cotton prices. For intermediate traders, high-priced inventory faces losses, with willingness to sell increasing but few buyers, accumulating liquidity risk.
Downstream textile enterprises face a more delicate situation. Weak order recovery and high finished goods inventories strain cash flow. The conservative procurement strategy—only replenishing on demand, no stockpiling—further compresses spot demand. This impasse of "upstream unwilling to sell, downstream unwilling to buy" is the market's core contradiction.
From an industrial belt perspective, spot transactions in Xinjiang, Shandong, Henan, and other major producing areas have slowed significantly. Some small and medium-sized spinning mills have begun reducing operating rates to control costs, while large enterprises use futures tools for hedging. Profit distribution across the chain is being reshuffled.
The core logic suppressing cotton prices shows no reversal signal. Ample new season supply expectations for US cotton persist, macro pressure from a stronger dollar and weaker commodities remains; domestic downstream consumption recovery is slow, with weak demand support. The market is likely to continue weak and volatile in the short term, lacking rebound momentum.
However, opportunities may emerge. The industry must track three key variables:
- US cotton weather: if extreme weather hits the growing season, supply expectations could tighten rapidly
- Domestic textile end orders: especially the start of autumn/winter clothing orders, which will directly affect demand recovery pace
- RMB exchange rate: if volatility increases, import cotton costs will face new variables
Only when substantive positive drivers emerge on both supply and demand sides can the current weakening trend be broken. Until then, cautious observation and flexible use of hedging tools will be rational choices for all chain participants.