A 42% weekly plunge in US cotton export commitments has directly dampened earlier optimism about demand recovery. ICE December cotton futures dropped 0.72 cents to settle at 77.12 cents per pound, a decline of 0.92%. Although the week still ended with a modest 0.97% gain, the weak export data has clearly shifted the market's tone toward caution.
Deep Dive into Export Data
The USDA export sales report for the week ending June 25 showed current-season upland cotton net sales of only 49,001 bales, down 42% from the previous week and a massive 70% below the prior four-week average. Sales to China were just 5,518 bales, with zero commitments for the next season. What does this mean? As the world's largest cotton consumer, China's absence is transmitting directly from demand to price.
More notably, this weakness is not a one-off event. The four-week average was already low, and this week's data marks further deterioration, indicating that downstream textile mills are not eager to rebuild inventories despite lower prices. With Southeast Asian spinning capacity not yet fully utilized, buyers prefer to digest existing stocks rather than establish new positions.
Macro vs. Fundamentals
The US dollar index fell sharply after weaker-than-expected jobs data, which typically supports dollar-denominated commodities. The US added only 57,000 jobs in June, far below the expected 110,000, easing market fears about Fed rate hikes. However, this macro support was not enough to offset the bearish fundamentals, and cotton futures still closed lower.
This shows that pricing power has returned to supply-demand dynamics. Once export data remains weak, the risk of a break below 75 cents increases significantly. Georgia-based cotton broker Keith Brown's view—that prices will oscillate in the 75-80 cent range—is becoming market consensus.
Impact on Buyers and Traders
For Chinese textile mills, what does the 77-cent level mean? At current ICE prices, landed import costs (including tariffs and VAT) are around 13,500-14,000 RMB per ton, offering no clear advantage over domestic Xinjiang cotton. This likely explains Chinese buyers' restrained approach.
For mills in Southeast and South Asia, the picture is slightly different. Yarn export orders from India, Vietnam, and Bangladesh have shown recent improvement, but final consumer demand recovery remains slow. These spinners focus more on spot shipment value than forward contracts.