On the last trading day of June, ICE cotton futures edged up 0.46% to 76.8 cents per pound, but this failed to mask the monthly decline of 3.51%. Crude oil's biggest monthly and quarterly drop since early 2020 became the core external factor dragging cotton prices. For the textile industry, raw material volatility is evolving from a simple supply-demand game into a tug-of-war between expanded acreage and extreme weather.
Expanded Acreage Signals Looser Supply
The USDA's June planting report showed 2026 US all-cotton acreage at 9.85 million acres, well above the market estimate of 9.636 million and the 2025 actual of 9.283 million. This implies further upside potential for new-crop supply. StoneX's senior vice president noted that while the market had priced in some increase, the actual number still exceeded expectations. For Chinese cotton textile mills, the prospect of looser US cotton supply will directly impact import procurement pacing and pricing negotiations.
Crop Ratings Drop and India Drought Challenge Output
However, acreage expansion does not guarantee higher production. In the week ending June 28, US cotton good-to-excellent ratings fell from 53% to 48%, below last year's 51%. Although planting progress reached 97%, close to the five-year average, deteriorating crop conditions during the critical growing period could offset some acreage gains. Meanwhile, India is experiencing its driest June in over a decade, with delayed monsoon rains slowing the planting of summer crops including cotton. As the world's second-largest cotton producer, India's output uncertainty will affect the raw material cost structure of the Asian cotton textile chain.
Macro Headwinds: Oil Slump and Strong Dollar
The external macro environment remains challenging. International oil prices recorded their largest monthly drop since the pandemic, directly weakening the cost support for chemical fiber substitutes and putting comparative pressure on cotton. The US dollar index strengthened in June, further depressing dollar-denominated cotton prices. While US stocks ended the quarter with their biggest gains, capital market optimism did not spill over into commodities. For textile foreign trade companies, a stronger dollar means renminbi-denominated import costs may rise relatively, requiring attention to exchange rate impacts on procurement decisions.
Spot Market Stable for Now, But Volatility Ahead
On the spot side, the Cotlook A index stood at 85.30 cents per pound on June 30, unchanged from the previous day, showing some support at current levels. But the futures monthly decline and the overhang of expanded acreage will gradually transmit to spot quotes. For buyers, the current window sees two opposing expectations—area expansion versus yield reduction—canceling each other out, likely leading to increased price volatility.