ICE cotton futures rebounded on June 25 after a multi-day decline, with the December contract rising 0.71 cents to close at 76.97 cents per pound. The contract had earlier touched a two-week low of 76.09 cents. The rebound was driven by a combination of short-term macro factors rather than a fundamental shift in demand.
Macro Support from Weaker Dollar and Higher Oil Prices
The U.S. dollar index fell after three consecutive days of gains, providing relief for dollar-denominated cotton. A weaker dollar makes U.S. cotton cheaper for overseas buyers, offering implicit support for export demand. Meanwhile, international crude oil prices rose about 2% on the day, fueled by renewed tensions in the Middle East after a cargo ship was attacked near Oman, raising concerns about shipping safety through the Strait of Hormuz. Higher oil prices increase the production cost of polyester fibers, creating indirect support for cotton through substitution effects.
Bargain Buying and Speculative Positioning
Following a sharp sell-off the previous day, the market saw clear bargain-hunting activity. A senior analyst at StoneX noted that current price levels attracted buyers, and speculative funds' technical repositioning also contributed to the rebound. This short-term recovery reflects market sentiment rather than any substantial improvement in demand. For textile mills, this suggests a near-term floor around 76 cents per pound, but the sustainability of any upward move remains uncertain.
Export Data Reveals Demand-Side Concerns
The USDA's weekly export sales report, released the same day, showed net U.S. cotton sales for the current marketing year at 83,864 bales for the week ending June 18, down 53% from the previous week and 61% below the four-week average. Sales for the next marketing year were 67,089 bales. Shipments totaled 300,155 bales, including 12,248 bales to China. The data indicate that despite relatively low cotton prices, global buying interest has not picked up significantly. This aligns with the cautious restocking pace in China's textile industry, where downstream orders remain short-term and small-scale, and mills are conservative in managing raw material inventories.
Industry Reactions and Price Expectations
In major Chinese textile clusters such as Shengze and Keqiao, weaving mill operating rates have remained stable, but new orders are limited and greige fabric inventories are building. In Nantong's home textile market, inquiries have increased, but actual transactions remain cautious. The industry generally expects cotton prices to trade in a range of 75-80 cents per pound in the near term, with a breakout requiring clear demand signals—such as improved U.S. apparel retail data or a recovery in Chinese export orders.