US cotton planting area unexpectedly expanded, and ICE cotton futures for December edged up to 76.8 cents/lb, but the monthly contract still recorded a 3.51% decline. Behind this drop, crude oil posted its biggest monthly and quarterly losses since early 2020, becoming the core external factor dragging cotton prices. For textile mills dependent on cotton raw materials, this means cost uncertainty is intensifying.
Acreage Surprise and Weather Disruption
The USDA's June 30 planting report showed 2026 US cotton acreage at 9.85 million acres, above market expectations of 9.636 million and up from 9.283 million acres actually planted in 2025. StoneX senior vice president Bailey McHenry noted that the market had been range-bound ahead of the report, and the actual data further confirmed the supply expansion trend.
But weather factors are blunting this bearish signal. As of the week ending June 28, US cotton good-to-excellent ratings fell to 48% from 53%, below last year's 51%. Planting progress reached 97%, slightly faster than 95% a year ago, but the continued decline in quality ratings means yield potential is being discounted. Meanwhile, India is experiencing its driest June in over a decade, with delayed monsoon progress slowing planting of summer crops including cotton.
Oil Rout Is the Core Drag
By the benchmark contract, cotton futures fell 3.51% month-on-month, not driven by fundamentals alone. International oil prices simultaneously posted their largest monthly and quarterly losses since the pandemic, with market expectations of possible US-Iran talks in Doha exacerbating oversupply concerns. McHenry commented that this month was quite bearish, with the market experiencing both technical corrections and pressure from the overall decline in oil prices.
The implication for the textile industry is that when crude oil fluctuates sharply as a chemical upstream variety, the price center of cotton as an alternative fiber raw material is also affected. Especially when oil is falling, cost support for chemical fiber products (such as polyester) weakens, which may further squeeze cotton's relative competitiveness.
Spot Market and Exchange Rate Transmission
On June 30, the Cotlook A index stood at 85.30 cents/lb, maintaining a spread of about 8.5 cents with the ICE December contract. The US dollar index rose that day, adding extra pressure on dollar-denominated international cotton prices. US stock markets ended June with their biggest quarterly gains since 2020, showing divergent macro sentiment—equities were optimistic while commodities were weak overall due to oil.
For Chinese textile mills with high dependence on imported cotton, a stronger dollar means passively higher procurement costs in RMB terms. If US cotton quality ratings continue to decline, supply contraction expectations could temporarily push up international prices, but if crude remains depressed, the room for cotton price rebound will also be limited.