U.S. cotton export sales plunged 40%, and ICE cotton futures fell on July 2. The market had hoped a weaker dollar would support prices, but weak export data outweighed currency benefits, with the December contract closing at 77.12 cents/lb, down 0.92%.
The Demand Reality Behind Export Data
The USDA export sales report for the week ending June 25 showed net sales of current crop upland cotton at only 49,001 bales, down 42% from the previous week and 70% below the four-week average. Sales to China were just 5,518 bales, and next crop sales to China were zero. This signals a clear slowdown in purchasing from the world's largest cotton consumer and importer.
From a broader perspective, this is not an isolated event. The global textile chain is undergoing a destocking cycle, with sluggish retail growth for finished apparel leading mills to adopt cautious raw material procurement. The U.S. added only 57,000 jobs in June, far below the expected 110,000, further confirming consumer-side recovery uncertainty.
Why Didn't a Weaker Dollar Support Cotton Prices?
The dollar index fell sharply after the weak jobs report, which theoretically should benefit dollar-denominated commodities including cotton. But the market reaction was opposite: the negative impact of weak export sales overwhelmed the marginal benefit from currency moves.
This reflects a shift in trading logic. Short-term market pricing has moved from macro liquidity to micro supply-demand. When real export orders shrink, currency hedging cannot compensate for missing actual demand. Keith Brown of Keith Brown and Co. noted that prices are likely to oscillate in the 75-80 cents/lb range, reflecting fragile supply-demand balance.
Practical Implications for Chinese Buyers
Current prices near 77 cents/lb are near the lower end of the range. For buyers needing to lock in raw material costs, this is a window to watch. However, if export data remain weak in coming weeks, prices may test the 75 cents support.
Meanwhile, zero next-crop sales to China may accelerate diversification of China's import sources. Competition from Brazilian and Australian cotton, along with stable Xinjiang production, is reshaping global trade flows.
Industrial Transmission and Price Outlook
Medium-term price direction depends on two variables: U.S.产区 weather conditions and the pace of Chinese textile order recovery. After the U.S. holiday, market focus will return to crop progress reports. If weather is normal, supply pressure is limited and price重心 may shift lower.
For Chinese spinners, raw material cost pressure is temporarily relieved, but whether terminal demand recovers in the traditional peak season (September-October) will be key for prices to break above 80 cents.