At 76.38 cents per pound, the ICE cotton December contract settled on June 26, down 0.77% from the previous session and hitting an intraday low of 75.50 cents—the lowest since June 11. The contract posted a weekly loss of 3.29 cents, or 4.13%, as improved global crop weather and falling oil prices combined to pressure the market.
Weather Improvement Eases Supply Concerns
USDA data showed that as of the week ending June 23, about 58% of U.S. cotton areas were affected by drought, down sharply from 76% the prior week. Adequate rainfall in May and June has boosted the outlook for cotton yields, reinforcing expectations of a larger new-crop supply. In India, the monsoon arrived later than usual but has now covered the entire country, accelerating sowing progress. With both major producers seeing better weather, the supply-side support that had previously lifted prices is fading.
Oil Price Decline Weighs on Cotton Demand
Crude oil fell more than 3% on June 26, posting a significant weekly loss. Although initial concerns over tanker traffic in the Strait of Hormuz had raised supply fears, the situation eased as vessels resumed passage. Lower oil prices reduce the production cost of polyester, a key substitute for cotton in textile manufacturing. When polyester becomes cheaper, mills tend to shift away from cotton, especially in a sluggish demand environment. "Oil is the most important commodity globally, and it does affect synthetic fiber prices," noted an industry analyst. "The external market is currently a mild negative for cotton."
Grain Market Linkages and Upcoming USDA Report
Corn and soybean futures retreated after recent gains, while wheat fell on harvest pressure. Investors are closely watching the USDA's annual acreage and quarterly stocks report due June 30. Analysts expect U.S. corn stocks as of June 1 to reach 5.408 billion bushels, up 16.5% year-on-year and the highest for that date since 1988. High grain inventories suggest a generally ample agricultural supply environment, which could spill over into cotton sentiment. ICE deliverable cotton stocks fell to 187,250 bales from 189,447 a day earlier, indicating subdued spot market activity.
Industry Impact and Price Outlook
In the near term, cotton prices may find support in the 75.50–76.50 cents range, but upward momentum is lacking. If the USDA report confirms higher-than-expected planted acreage, prices could test the 75-cent level. For Chinese importers, lower international prices mean a narrowing of the domestic-import spread, reducing raw material costs for mills. However, currency risk remains a factor. Downstream, lower fiber costs will gradually feed into yarn pricing, allowing fabric makers to enjoy slightly improved margins. Mills are advised to pace their purchases and wait for clearer signals after the report.