The US cotton market is experiencing an 'export chill'. The latest USDA weekly export sales report shows that for the week ending June 25, total net sales of US upland cotton reached 93,118 bales, but net sales for the current marketing year were only 49,001 bales, down 42% from the previous week and a sharp 70% below the prior four-week average. This data directly dashed market hopes for a demand recovery, sending the ICE cotton futures December contract down 0.72 cents to 77.12 cents per pound, a drop of 0.92%.
Structural Weakness in Demand
More noteworthy is the structural shift behind the export data. Net sales to China for the current week were just 5,518 bales, while net sales to China for the next marketing year were zero. As the world's largest cotton importer, China's sudden slowdown in purchasing has placed substantial downward pressure on the US cotton market. This reflects both the lingering uncertainty of Sino-US trade policy and the tendency of Chinese textile mills to digest domestic inventories or switch to alternative sources like Brazilian cotton.
From a global supply-demand perspective, the sharp contraction in US cotton exports is not an isolated event. The US June non-farm payrolls report fell far short of expectations—adding only 57,000 jobs versus the 110,000 expected—which briefly sent the US dollar index tumbling. While a weaker dollar theoretically benefits dollar-denominated cotton exports, actual sales did not benefit. This indicates that the core constraint on cotton trade is not exchange rates, but weak end-consumer demand and a lack of buying confidence downstream.
Industrial Logic Behind Rangebound Prices
Georgia-based cotton broker Keith Brown's view is representative: cotton prices are likely to trade in a 75-80 cents per pound range in the near term. This judgment is based on a two-tiered game. Upward pressure comes from the demand side—persistently weak export data means inventory digestion is slower than expected, and the approaching Northern Hemisphere new crop season will add supply-side pressure. Downward support comes from the cost side—75 cents per pound is close to US farmers' production cost line, and further declines would trigger holding sentiment, while a weaker dollar also provides a floor.
For domestic textile mills, this price range means a narrowing window for raw material procurement. Current prices are in the middle of the range—neither a clear low nor a high—requiring more refined inventory risk management. Given that downstream orders for grey fabrics and finished textiles have not yet shown a clear recovery, excessively high raw material inventories will tie up capital, while too-low inventories risk price spikes during replenishment.
Post-Holiday Market Variables
The US market will close for the Independence Day holiday this Friday, and short-term trading volumes may shrink. However, the market after the holiday will face several key variables. First, the USDA's global cotton supply-demand report due in mid-July will be closely watched for potential downward revisions to US export estimates. Second, any signals of a new round of high-level Sino-US economic engagement could directly affect the pace of China's cotton purchases. Third, weather conditions in the key US cotton-producing state of Texas will become a focal point for both bulls and bears.
From an industry chain perspective, the weak rangebound movement in US cotton prices has already transmitted to China's Zhengzhou Cotton Futures market through changes in the import cotton price spread. Domestic textile mills should closely monitor the spread between domestic and imported cotton. If the spread narrows or even inverts, domestic cotton will become more competitive, potentially triggering a shift in procurement structure.