Domestic cotton prices hovered around 15,800 yuan/ton, while New York cotton futures traded narrowly near 77 cents/lb during the last week of June 2026, forming a classic 'floor and ceiling' pattern. Zhengzhou cotton futures settled at an average of 15,869 yuan/ton, down just 25 yuan/ton from the prior week; New York cotton futures averaged 77.55 cents/lb, a 1.2% decline. The domestic-import spread remained elevated at 3,140 yuan/ton, keeping imported cotton cost-advantageous.
Supply-Demand Dynamics: Weak Demand as a Near-Term Constant, Supply Variables Drive Expectations
The core tension in the market lies in demand's inability to provide upward impetus, while supply uncertainties continue to underpin prices. On the demand side, China's textile sector has entered its traditional off-season. The C32S carded cotton yarn weekly average was 23,274 yuan/ton, up merely 9 yuan/ton week-on-week; polyester staple fiber fell 128 yuan/ton to 7,365 yuan/ton, highlighting synthetic fiber substitution pressure. Mills maintained low raw material inventories and adopted hand-to-mouth purchasing strategies, failing to generate meaningful demand pull.
Supply presents a mixed picture. USDA data showed 2026/27 US cotton planting reached 92% by June 21, with Texas at 90%. However, the crop condition rating 'good to excellent' stood at only 44%, though up 9 percentage points year-on-year. India's situation is more severe: monsoon rainfall was 43% below the historical average through the week, with early July forecasts remaining weak. Indian cotton cultivation relies heavily on June-July monsoon precipitation; persistent deficits could significantly threaten new-crop output.
Geopolitical Variable: US-Iran Détente Frees Capacity, but Transmission Takes Time
A new variable emerged from the Middle East. A US-Iran memorandum of understanding temporarily opened the Strait of Hormuz for 60 days, with daily oil shipments recovering to about 4.8 million barrels. This could release approximately 300,000 TEUs of container capacity, alleviating prior shortages and high freight rates. While lower freight costs marginally improve import cotton cost structures, the current 3,140 yuan/ton spread still favors domestic cotton.
Domestic Fundamentals: Xinjiang Squaring Progress Smooth, but Southern Irrigation Pressure Looms
No systemic production risk exists for China's domestic cotton. Xinjiang's main production areas reported 94-95% squaring rates, with local fields beginning sporadic flowering. Growth is generally on schedule. However, regional divergence warrants attention: northern Xinjiang enjoys favorable hydrothermal conditions, while southern Xinjiang faces localized irrigation pressure from high temperatures and increased evapotranspiration. National Bureau of Statistics data showed China's industrial enterprises above designated size posted 18.8% profit growth in January-May 2026, with the textile sector up 11.7%, indicating resilience—though whether this momentum persists depends on cotton price stability and terminal demand recovery.
Price Outlook: Range-Bound Pattern Unlikely to Break Soon
The market's core logic is 'weak near-term demand, tight medium-term supply.' Demand is suppressed by the off-season and synthetic fiber substitution; mills maintain only just-in-time procurement. Supply is supported by global weather uncertainties, domestic destocking, and expectations of lower new-crop output. Without a substantive demand recovery signal, cotton lacks upside momentum; but supply concerns provide a solid floor. Near-term, prices are expected to oscillate within 15,500-16,200 yuan/ton (Zhengzhou) and 75-80 cents/lb (New York).