U.S. cotton export sales data saw a cliff-like decline in the final week of June. The latest USDA weekly report shows that for the week ending June 25, net sales of upland cotton for the current marketing year were 49,001 bales, down 42% from the previous week and 70% below the four-week average. Sales to China were a mere 5,518 bales, while new crop sales to the country hit zero.
The Industrial Logic Behind the Export Slump
This data point is not an isolated event but the result of multiple converging factors. First, from a procurement rhythm perspective, Chinese textile mills typically enter a digestion phase for their cotton inventories in the second quarter, making new purchase intentions naturally weak. Second, persistent uncertainty in Sino-U.S. trade policy continues to suppress forward orders, leading importers to prefer just-in-time buying over building large inventories.
On the price front, the ICE December cotton futures contract fell 0.92% on the report's release, settling at 77.12 cents per pound. Market consensus points to short-term price oscillation within a 75 to 80 cents per pound range. This means the current level is neither a clear bottom nor a confirmed signal of a rebound for textile mills.
Notably, the U.S. dollar index fell significantly during the same period, triggered by June employment data that came in well below expectations—only 57,000 new jobs were added versus the 110,000 forecast. Theoretically, a weaker dollar supports dollar-denominated commodities, but the weakness in export data overwhelmed the currency factor, indicating that fundamental pressures are the dominant force.
How the Commodity-Currency Game Transmits to Procurement
Fluctuations in the dollar index have multi-layered effects on the textile industry. For cotton-importing countries settling in dollars, a weaker dollar means lower procurement costs, which typically stimulates buying to some extent. However, the current situation is more complex: the recovery of downstream garment orders remains uneven, with mill utilization rates in some Southeast Asian countries still below pre-pandemic levels, limiting actual raw material consumption.
In the Chinese market, the price gap between imported and domestic cotton is narrowing. The quality and yield advantages of Xinjiang cotton persist, leading some mills to favor domestic resources in their procurement decisions. This partly explains why U.S. cotton sales to China remain sluggish—it is not a disappearance of demand but a shift in sourcing structure.
From a supply chain transmission perspective, cotton price oscillation in the 75-80 cent range is putting downward pressure on yarn prices. Cotton yarn traders report that end-user orders are dominated by small volumes and short lead times, with weak replenishment appetite at the intermediary level. This suggests that if U.S. cotton export data does not improve in the coming weeks, prices may test support below 75 cents.