76.38 cents per pound — this was the settlement price for ICE December cotton futures on June 26, down 0.59 cents from the previous day, and hitting an intraday low of 75.50 cents, the lowest since June 11. The weekly cumulative decline reached 4.13%, driven by the combined pressure from weather and energy factors.
Weather Improvement: Drought Eases in Producing Regions, Supply Outlook Strengthens
Major global cotton-growing regions are experiencing favorable weather. The latest USDA drought monitor shows that as of the week ending June 23, about 58% of US cotton areas were affected by drought, a significant narrowing from 76% the previous week, meaning more than 40% of drought-affected areas saw relief in just one week. Adequate rainfall in May and June bodes well for the US cotton harvest.
Meanwhile, the Indian monsoon, though delayed, has arrived and is providing critical moisture for the country's cotton sowing. The simultaneous weather improvement in the world's two largest cotton-producing countries has directly boosted market expectations for a production increase in the new season, becoming a core logic behind the price pressure.
Oil Price Decline: Lower Polyester Costs Indirectly Weigh on Cotton
External markets are also unsettled. International oil prices fell over 3% on June 26, recording a significant weekly decline, mainly due to the resumption of tanker traffic through the Strait of Hormuz, easing earlier supply disruption concerns. The most direct industrial impact of lower oil prices is reduced production costs for polyester fiber, a major substitute for cotton, which indirectly diverts textile demand away from cotton.
Industry analysts point out that as the world's most important commodity, oil price fluctuations transmit through the synthetic fiber chain to the cotton market, creating an 'indirect bearish' effect. Current external market sentiment toward cotton is negative.
Key Event: USDA Planting Report to Set the Tone
The market is now focusing on the USDA's annual planting acreage and quarterly stocks report, scheduled for release on June 30 (July 1 Beijing time). This report will provide critical clues about supply estimates for major agricultural products and will be an important guide for the subsequent price trends of cotton, corn, and soybeans.
In the grain market, expanding high temperatures in the US Midwest have led to pullbacks in corn and soybeans after earlier gains, while wheat has fallen due to supply pressure from advancing harvests. Overall sentiment in the agricultural market is mixed, and the external environment for cotton is not loose.
Industry Impact: Procurement Window May Open, but Report Risk Remains
For the textile supply chain, the current decline in cotton prices means a phased reduction in raw material procurement costs. However, with the USDA report approaching, market volatility may increase, and procurement decisions need to be more cautious.
- If the report shows acreage above expectations, cotton prices could fall further, and buyers should wait until after the report to decide.
- If acreage is below expectations, prices may rebound, and buyers could consider locking in forward order costs in batches.
On the spot side, the Cotlook A index on June 26 was 85.80 cents per pound, up 75 points from the previous day, indicating that the spot market is relatively lagging behind the futures decline, leaving some room for spread repair.