On June 25, ICE cotton futures staged a technical rebound after a sustained sell-off, with the most-active December contract rising 0.71 cents to settle at 76.97 cents per pound, a gain of 0.93%. Earlier in the session, the contract hit a two-week low of 76.09 cents. The bounce was driven by a weaker US dollar, bargain buying, and higher crude oil prices.
Macro and Cost Factors Converge The US dollar index ended a three-day winning streak after a batch of economic data dampened expectations for a Fed rate hike this year. A softer dollar makes dollar-denominated cotton more affordable for non-US buyers. Meanwhile, crude oil rose over 2% after a vessel attack near Oman reignited concerns about Middle East supply disruptions. Higher oil prices boost the cost of polyester, a cotton substitute, indirectly supporting cotton values.
StoneX senior vice president Bailey McHenry noted that after the previous day's sharp sell-off, the market saw technical repositioning, with speculative funds finding support around 76 cents. This suggests that 76 cents has become a key psychological and cost floor.
Mixed Export Data USDA's weekly export sales report for the week ending June 18 showed net sales of 83,864 bales for the current season, down 53% from the prior week and 61% below the four-week average. Next-season sales added 67,089 bales, bringing the combined total to about 151,000 bales. Shipments reached 300,155 bales, up 20% week-on-week but still 16% below the four-week average. Shipments to China were only 12,248 bales, indicating cautious buying from the world's largest importer.
The data suggests uneven global demand recovery. While Southeast Asian and South Asian markets are restocking, China remains focused on digesting domestic inventories. Whether Chinese buyers re-enter the market at current price levels will be a key variable for the next move.
Spot Market Under Pressure In contrast to the futures rebound, the spot market continued to weaken. The Cotlook A index dropped 250 points to 85.05 cents per pound, reflecting mills' preference for hand-to-mouth buying. This divergence between futures and spot prices usually signals that a bottom has not yet been fully established, but the futures rally may foreshadow stabilization in the physical market.
For textile mills, the prudent strategy is to lock in short-term costs in small tranches near the 76-77 cents range, while watching whether the 76-cent support holds. A break below could trigger another round of stop-loss selling.