The noon closing of China's futures market on June 29 saw a broad rally in textile raw material contracts. The cotton main contract (2609) settled at 16,070 yuan per ton, up 2.49%, while cotton yarn (2609) gained 2.17% to 22,575 yuan per ton. PTA (2609) rose 1.90% to 5,570 yuan per ton, and both staple fiber (2608) and bottle-grade chip (2609) advanced 1.18%, closing at 7,028 yuan and 6,712 yuan per ton respectively.
This rally is not an isolated event. From the open-interest data, cotton saw the largest increase with rising positions, indicating capital is flowing in based on industrial logic rather than speculative short-term trades. The strong performance of cotton yarn suggests the market is pricing in an upstream cost pass-through in advance.
Low Inventories and Planting Uncertainty
Current raw material inventories at textile mills are historically low. According to industry data, average cotton inventories at large-scale mills stood at fewer than 30 days of consumption by mid-June, roughly 5-7 days below the multi-year average. Low inventories mean any pickup in orders or supply disruption will quickly translate into price support.
At the same time, uncertainty over the new-season cotton planting area in Xinjiang persists. Although official figures are pending, market expectations of reduced acreage have already been priced in. For commodities like cotton, supply-side variables are often more sensitive than demand, especially when inventories are lean.
Cost Pass-Through and Downstream Absorption
The follow-through gains in PTA and staple fiber are essentially cost-push. After the cotton rally, cotton yarn offers have already been raised tentatively, but acceptance at the grey fabric stage remains questionable. End-user apparel orders are recovering slowly, and external demand faces headwinds from exchange-rate volatility and tariff uncertainties, which will limit how much of the raw-material gain can be passed down.
Notably, the bottle-grade chip contract also rose, signaling that the rally is not confined to the cotton chain but reflects broad support across the polyester complex. Crude oil remains elevated, PX supply is tight, and PTA processing margins are compressed, together forming a floor for polyester raw materials.
Price Outlook and Procurement Window
Technically, the cotton contract faces strong resistance around 16,000 yuan per ton, where earlier hedging positions may be re-entered. Without fresh bullish catalysts, a short-term pullback is likely. However, in the medium term, the supply vacuum before new-crop arrival, combined with mill restocking, should support higher price levels.
For downstream buyers, chasing the rally at current levels is risky. The recommended approach is to wait for a pullback to the 15,500-15,700 yuan range for phased building of positions, while using forward contracts to lock in part of Q4 raw-material costs.