The latest USDA export sales report delivered a cold shower to the cotton market. On July 2, ICE cotton futures for December delivery fell 0.72 cents, settling at 77.12 cents per pound, a decline of 0.92%. Despite a sharp drop in the dollar index due to weaker-than-expected U.S. jobs data, the bearish export figures completely overshadowed the currency tailwind, leaving market sentiment clearly under pressure.
The Demand Reality Behind the Numbers
For the week ending June 25, total net U.S. upland cotton export sales reached 93,118 bales. While this figure may seem respectable at first glance, the breakdown reveals a troubling picture. Current marketing year net sales stood at just 49,001 bales, a staggering 42% drop from the previous week and a 70% plunge from the four-week average. Sales to China, the world's largest cotton consumer, amounted to a mere 5,518 bales. For the 2025/26 marketing year, net new crop sales to China were zero.
What does this data mean? The absence or cautious stance of Chinese buyers has directly caused a cliff-like slowdown in U.S. cotton export momentum. This is not merely a weekly fluctuation; it may be a clear signal that weak end-demand in the global textile sector is transmitting upstream to raw material markets.
Industry Impact: Procurement Logic in a Range-Bound Market
The assessment from Georgia-based cotton broker Keith Brown deserves attention: cotton prices are likely to trade in a 75-80 cent per pound range in the near term. This view is built on two core logics.
First, the demand side lacks a catalyst for a breakout. Chinese textile mills are adopting conservative inventory strategies, buying hand-to-mouth rather than stockpiling, consistent with an ongoing destocking cycle in the finished garment market. Second, on the supply side, while macro factors like a weaker dollar provide some support, trading volumes shrink ahead of holidays, and capital participation is low, leaving the market without a clear directional driver.
For textile enterprises, this means raw material costs will remain at a relatively manageable but inflexible level. If cotton prices stay in the 75-80 cent range for an extended period, yarn prices will also move in a narrow band. Mills' profit margins will depend more on their own product mix and production efficiency than on raw material price arbitrage.
The Double-Edged Sword of Macroeconomics
Another variable worth noting is the ripple effect of the macroeconomy. The U.S. added only 57,000 jobs in June, far below the 115,000 expected by economists. While this caused the dollar index to tumble, theoretically supporting dollar-denominated cotton, weak employment itself signals fragile consumer confidence.
For textile foreign trade companies, this is a classic double-edged sword: a weaker dollar helps export pricing competitiveness, but a cooling U.S. job market may further suppress purchasing power for consumer goods like apparel. Weighing the two, the negative demand-side impact appears more direct and persistent.