US cotton export data sent a chill through the market. The latest USDA weekly sales report showed net upland cotton sales of just 93,118 bales for the week ending June 25. Current-crop sales were 49,001 bales, down 42% from the previous week and a staggering 70% below the four-week average. Sales to China were particularly weak at only 5,518 bales, with zero new-crop commitments. This triggered a 0.92% decline in ICE December futures to 77.12 cents/lb.
Demand Side: Export Structure Reveals Concerns
The sharp drop in export data is not an accident. As the current season (2025/26) winds down, buyers' restocking appetite naturally fades, but a 70% sequential decline still surprised the market. More telling is the new-crop forward sales: only 44,117 bales were booked globally, with zero from China. As the world's largest cotton importer, China's absence raises questions. On one hand, domestic textile mills may still be digesting earlier inventories; on the other, the price spread between imported and Xinjiang cotton, along with quota usage timing, all influence actual purchasing decisions.
From an industry transmission perspective, weak exports directly suppress US cotton basis levels. For Chinese mills holding US cotton orders, the lower ICE price could be offset by a stronger yuan if the dollar weakens further. Procurement teams must track both cotton prices and exchange rates as a dual-variable game.
Macro Picture: Weak Jobs Data, Dollar Under Pressure
On the same day, the US June employment report poured cold water on the market. Nonfarm payrolls added only 57,000 jobs, less than half the 110,000 economists had expected. The unemployment rate fell from 4.3% to 4.2%, but this improvement was more due to a lower labor force participation rate than genuine labor market strength. The dollar index fell sharply on the data, which usually supports dollar-denominated cotton, but the export sales gloom completely overwhelmed that support.
This reflects a shift in macro logic: when demand itself cracks, a weaker dollar's price advantage fails to translate into actual sales. For export-oriented textile firms, a weaker dollar helps with forex settlement in the short term, but if a US economic slowdown further curbs apparel consumption, order shrinkage will offset any exchange gains.
Price Outlook: 75-80 Cents/lb Range as the New Anchor
Balancing supply and demand, the market is searching for a new equilibrium. Georgia-based cotton broker Keith Brown's view is representative: prices are likely to oscillate in the 75-80 cents/lb range in the near term. The logic behind this range:
- Downside support: 75 cents/lb is near the US cotton production cost. A break below that would trigger farmer hoarding and acreage reduction expectations.
- Upside resistance: Above 80 cents/lb requires substantial demand recovery, which is unlikely given China's buying slowdown and cautious global textile consumption.
One risk to watch: if next week's export data remains weak, coupled with lower liquidity after the US Independence Day holiday, cotton could test the 75 cents/lb support. Conversely, if Chinese buyers step in at lower prices, a rebound toward 78-79 cents/lb is possible.