When the US dollar index hit a 13-month high of 101.8 and Brent crude oil fell to its lowest level since the Iran conflict, the commodity market is undergoing a typical macro stress test, with cotton bearing the brunt. The most active ICE cotton December contract closed at 76.26 cents per pound on June 24, down 2.47 cents or 3.14% from the previous session, hitting an intraday low of 76.15 cents, the lowest since June 15. This marks the fourth consecutive day of decline for the contract, with a cumulative pullback of over 13% from the high above 88 cents set on May 13.
Dual Macro Pressure
The US dollar index strengthened for three consecutive days, driven by rising market expectations for the Federal Reserve to continue raising interest rates within the year. The sell-off in tech stocks further pushed funds into dollar-denominated assets, pushing the dollar index to its highest level since May 2025. For dollar-denominated cotton, this means a significant increase in the actual import cost for non-US buyers, directly suppressing international buyers' inquiry intentions. A Kansas-based commodity analyst noted that a stronger dollar typically puts pressure on all commodities because it makes US goods more expensive for foreign buyers.
Meanwhile, international oil prices plunged more than $3 per barrel. As oil tankers previously stranded in the Strait of Hormuz gradually departed, supply concerns quickly eased, and Brent crude oil prices fell back to levels before the geopolitical conflict erupted. The most direct industrial impact of falling oil prices lies in the reduction of chemical fiber costs—polyester fiber, the main substitute for cotton, sees its production costs decline with lower oil prices. This will further erode the competitiveness of the cotton textile industry chain, prompting downstream buyers to tilt towards chemical fibers in raw material selection.
Industry Fundamentals: Export Data Weakens, Acreage Uncertain
Beyond macro headwinds, cotton's own supply-demand fundamentals are equally unoptimistic. USDA export data released last week showed that net sales of 2025/26 cotton for the week ending June 11 were only 177,100 bales, down 15% from the previous week; actual exports were 251,000 bales, down 16% month-on-month. The slowdown in export pace reflects weak overseas demand amid high prices and competition from substitutes.
The market is now focusing on two key reports due on June 30: the USDA planting acreage report and the quarterly stocks report. Earlier drought had pushed cotton prices up, but heavy rainfall in major production areas in late June has clarified the growth prospects for new crops. If the acreage data exceeds expectations or the stocks report shows ample supply, cotton prices may face further downward pressure. Analysts believe that before the June 30 reports are released, cotton prices may find some support at current levels, but directional breakthroughs still await official data guidance.
Spot Market Follows, Cotlook A Index Falls
The continuous decline in the futures market has transmitted to the spot side. On June 24, the Cotlook A index stood at 87.55 cents per pound, down 75 points in a single day. The increased correlation between spot and futures prices means that spinning mills' actual procurement costs are rapidly declining, but it also reflects a strong wait-and-see sentiment in the market—amid macro uncertainty and pending policy reports, buyers prefer to delay replenishment rather than actively bottom-fishing.