US cotton acreage exceeded expectations, and crude oil posted its largest monthly drop since early 2020, dragging ICE cotton futures down 3.51% month-over-month. This combination is reshaping short-term expectations in the textile raw materials market.
Dual Pressure from Acreage and Oil
The USDA's June 30 planting report estimated 2026 US all-cotton acreage at 9.85 million acres, above the market forecast of 9.636 million and significantly higher than the 9.283 million acres actually planted in 2025. The larger-than-expected acreage signals potential supply increases, putting downward pressure on prices.
Meanwhile, international crude oil prices recorded their largest monthly and quarterly declines since the COVID-19 pandemic began in early 2020. As crude is fundamental to the petrochemical chain, its price drop affects synthetic fibers and transportation, indirectly weakening cotton's relative competitiveness. StoneX Senior Vice President Bailey McHenry noted that the monthly performance was quite bearish, driven by both technical corrections and pressure from the overall decline in oil prices.
Mixed Fundamentals
However, the supply side is not entirely negative. The US cotton good-to-excellent rating fell to 48% from 53% a week earlier, below last year's 51%. Although planting progress reached 97%, slightly ahead of last year, deteriorating crop conditions could impact final yields.
Overseas production zones also face uncertainties. India is experiencing its driest June in over a decade, with delayed monsoon progress slowing the planting of summer crops like cotton, rice, and corn. If the drought persists, Indian cotton output faces downside risks, potentially providing global price support.
Impact on the Textile Chain
For textile mills, the monthly price decline means lower raw material procurement costs in the short term, but inventory risk from price volatility must be managed. The bearish expectation from higher acreage may persist for weeks, while falling good-to-excellent ratings and India's drought offer a price floor.
Downstream buyers tend to adopt a wait-and-see approach or make small replenishments during price downturns, waiting for clearer bottom signals. This could slow raw material destocking, affecting upstream ginners and traders.