A heavy blow from export data halted ICE cotton's rebound ahead of the Independence Day holiday. On July 2, the most-active December contract fell 0.72 cents to 77.12 cents per pound, down 0.92%, while the weekly gain was a marginal 0.97%.
Export Slump
The USDA's weekly export sales report delivered unsettling numbers. For the week ending June 25, net sales of upland cotton for the current marketing year totaled 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, nearly negligible. For the next marketing year, net sales were 44,117 bales, with zero sales to China.
What does this mean? For China, the world's largest cotton importer, the sudden slowdown in purchasing is no coincidence. The recovery strength of domestic textile downstream orders and uncertainties in Sino-U.S. trade policy are directly reflected in the signing data. For U.S. cotton merchants, losing Chinese buyers implies mounting inventory pressure.
Weak Dollar Fails to Offset Fundamentals
The U.S. June employment report released the same day was unexpectedly weak, showing only 57,000 new jobs, far below the market expectation of 110,000. The U.S. dollar index fell sharply, which normally would support dollar-denominated cotton futures. But the market reacted coldly, as negative sentiment from the export data dominated.
This 'failure to rally on good news' signal typically indicates a lack of confidence in short-term supply-demand fundamentals. The U.S. market was closed Friday for Independence Day, and position adjustments ahead of the long weekend also intensified bearish sentiment. Notably, the December contract represents the main contract after new crop marketing begins, and its trend already reflects supply-demand expectations for the 2025/26 season.
Trading Range and Industry Response
Georgia cotton broker Keith Brown expects cotton prices to trade in a 75-80 cents per pound range near term. This assessment covers the core divergence in the current market: 75 cents is the cost support level for growers, while 80 cents is the psychological price for Chinese buyers to replenish stocks.
For textile mills, the current price level offers a relatively clear procurement window. If prices fall to around 75 cents, it should be seen as an opportunity to build safety stocks; conversely, if they rebound above 80 cents, chasing highs should be avoided.
From a broader industry perspective, the weak export data is not an isolated event. The recovery of global textile and apparel consumption remains uneven, with capacity recovery in Southeast Asia and South Asia diverting some orders, while China's own raw material inventory strategy has turned conservative. These structural changes are depressing cotton trade liquidity.