US cotton export data turned abruptly cold, pouring cold water on international cotton prices. For the week ending June 25, total net sales of US upland cotton reached 93,118 bales, but the structural issues were glaring: net sales for the current marketing year were only 49,001 bales, down 42% from the previous week and a staggering 70% from the four-week average. This data directly dragged ICE cotton futures for December down 0.72 cents to close at 77.12 cents/lb, a decline of 0.92%.
Industrial Signals Behind Weak Demand
The most notable aspect of the export slump was the absence of Chinese buyers. Net sales to China for the week were only 5,518 bales, and sales for the next marketing year to China were zero. As the world's largest cotton importer, a slowdown in China's purchasing pace often implies a prolonged destocking cycle for downstream yarn and grey fabric, or that the domestic-foreign price spread is no longer attractive for imports. For weaving hubs like Shengze and Nantong, if cotton prices oscillate within the 75-80 cent range, it will directly compress mill margins—the scenario of high raw material costs without smooth price transmission to end orders may resurface.
Meanwhile, US macro data sent mixed signals. Non-farm payrolls added only 57,000 in June, far below the market expectation of 110,000, though the unemployment rate fell from 4.3% to 4.2%. Weak job growth caused the US dollar index to plunge, theoretically supporting dollar-denominated cotton, but the poor export sales data offset this support. The market leans toward believing that the substantive contraction in demand will have a more lasting impact than exchange rate fluctuations.
Price Range and Supply Chain Transmission Logic
Georgia-based cotton broker Keith Brown's assessment is highly representative: short-term cotton prices will operate within a 75-80 cent/lb box range. This range carries different implications for different segments of the supply chain. For Xinjiang cotton processors, if ICE cotton stays below 80 cents, the inverted domestic-foreign spread will weaken imported cotton's competitiveness, benefiting domestic cotton consumption. But for coastal mills dependent on US cotton quotas, locking in raw material costs becomes more difficult, requiring more flexible hedging strategies.
On the spot side, the Cotlook A index rose 100 points to 86.55 cents/lb, diverging from futures. This reflects persistent rigid restocking demand in the international spot market, particularly from Southeast Asian textile countries willing to buy at lower price points. However, a widening futures-spot spread often signals heightened disagreement over the medium-term supply-demand balance.