The global cotton market is experiencing a cooling sentiment. The ICE cotton futures contract for December delivery fell to 75.50 cents per pound, the lowest point since June 11. The weekly cumulative decline reached 4.13%.
Weather Improvement and Supply Expectations
The primary driver for the decline comes from the supply side. Data from the U.S. Department of Agriculture (USDA) shows that as of June 23, approximately 58% of U.S. cotton growing areas were affected by drought, a significant narrowing from 76% the previous week. This indicates improving soil moisture conditions in major producing regions.
Although the Indian monsoon arrived slightly late, it has now fully reached the subcontinent, alleviating earlier market concerns about South Asian cotton production. The simultaneous improvement in weather conditions across global major producing areas directly strengthens market expectations for a loose cotton supply in the 2026/27 season.
Indirect Transmission of Falling Oil Prices
External markets are also unsettled. International oil prices recorded a significant weekly decline, with U.S. crude falling 3.7% in a single day. Falling oil prices directly reduce the production cost of polyester fiber, the main substitute for cotton in textile raw materials.
When synthetic fiber costs drop, downstream spinning mills tend to adjust their raw material mix, increasing chemical fiber usage and reducing cotton purchases. This substitution effect further weakens cotton demand support at a time when cotton prices are already under pressure.
Linkage Effects from Grain Markets
Investors are awaiting the USDA's annual planting area and quarterly stocks report due June 30. Analysts expect U.S. corn stocks as of June 1 to be 16.5% higher than the same period last year, the highest for that date since 1988.
The high inventory expectations in grain markets, combined with improved weather in cotton-growing regions, are putting the entire agricultural commodity sector under pressure. Corn and soybean prices have fallen amid expanding high-temperature areas, further reinforcing the market's judgment that the price center for bulk agricultural products is shifting downward.
Practical Impact on the Cotton Textile Chain
Current cotton prices are at a cyclical low, which may open a raw material procurement window for downstream weaving and garment companies. However, caution is needed as cotton futures prices have not yet stabilized. The June 30 USDA report could bring new directional signals.