The US Independence Day holiday briefly halted ICE cotton futures trading, but the spot market did not take a break. On July 3, the Cotlook A index fell 75 points to 85.80 cents/lb, while the US dollar index weakened. This combination is no coincidence—it reveals that cotton pricing is shifting from futures sentiment to a dual-axis game of spot fundamentals and macro exchange rates.
Spot Decline Accelerates: Supply-Demand Easing Remains
The Cotlook A index continues to face pressure around 85 cents, with the single-day drop of 75 points being the largest in two weeks. According to public industry data, new crop progress in major Northern Hemisphere producing countries is normal, and global ending stocks remain high. The combination of ample supply expectations and weak downstream mill purchasing appetite is the core reason spot prices cannot stabilize. For Chinese import cotton buyers, current foreign cotton prices have fallen below the psychological cost line for most mills, but purchasing decisions are frozen by doubts about whether prices have bottomed.
Dollar Weakens: Exchange Rate Variables May Rewrite Import Costs
The dollar index fell during the holiday, providing implicit support for dollar-denominated international cotton prices. If the dollar continues to weaken, even if the Cotlook A index remains nominally unchanged, the actual import cost in RMB will decrease. However, exchange rate transmission has a time lag—after futures trading resumes, ICE cotton may face a tug-of-war between 'macro bullishness' and 'industrial bearishness.' For weaving enterprises relying on imported cotton, the current focus should be on the bilateral fluctuation rhythm of the RMB against the dollar, rather than just watching screen prices.
Industrial Belt Reactions: Procurement Pace Divergence Intensifies
Feedback from major cotton textile industrial belts such as Keqiao and Nantong shows that corporate inventory strategies have clearly diverged. Some large spinning mills are replenishing stocks in batches at spot lows, while small and medium factories generally maintain extremely low inventories of 7-10 days, waiting for clearer price signals. This divergence fundamentally reflects disagreement on the outlook: bears believe 85 cents/lb is not the bottom, while bulls think macro liquidity easing will support commodities. The spot price drop during the holiday actually amplified this divergence—trader offers increased, but transactions remained light.