US cotton export data has suddenly cooled, dousing the recently stabilized international cotton market. The latest USDA weekly report shows that for the week ending June 25, total net sales of US upland cotton were 93,118 bales, but current marketing year net sales were only 49,001 bales, down 42% from the previous week and 70% below the four-week average. This sharp drop signals a significant contraction in international buying appetite for US cotton.
Export Breakdown: China's Absence
More noteworthy is the shift in destination countries. China's net purchases of current-year US cotton were only 5,518 bales, while next marketing year sales to China were zero. As the world's largest cotton importer, China's phased withdrawal directly dragged down overall sales performance. This isn't an isolated event—Chinese purchases have been gradually declining for weeks, reflecting adequate raw material inventories among domestic textile mills and a slower pace of import quota usage.
Other major buyers like Vietnam and Pakistan have made sporadic purchases, but these cannot offset the gap left by China's reduced demand. For US cotton exporters, losing the support of this core buyer means inventory digestion cycles will inevitably lengthen.
Price Reaction: Dollar Weakness Fails to Offset
On the day of the export data release, ICE December cotton futures fell 0.72 cents to settle at 77.12 cents/lb, a decline of 0.92%. Notably, the US dollar index slumped on the same day after the June employment report showed only 57,000 new jobs—far below the expected 110,000. Typically, a weaker dollar supports dollar-denominated commodities, but cotton prices failed to gain traction, indicating that weak export fundamentals have become the market's dominant concern.
On a weekly basis, December futures still managed a modest 0.97% gain, but market sentiment has clearly turned cautious. Georgia-based cotton broker Keith Brown noted that prices are likely to trade in a 75-80 cent range in the near term. This suggests that current support around 77 cents is fragile—if export data continues to disappoint, prices could drift toward the lower end of the range.
Supply Chain Impact: Mills Adjust Procurement
The ripple effects of weak US cotton exports are becoming apparent downstream. For major textile processing countries like China, Vietnam, and Bangladesh, sustained pressure on foreign cotton prices will widen the spread between domestic and imported cotton, affecting the competitiveness of local cotton. China's domestic 3128B grade cotton price index currently stands around 15,800 yuan/ton, with the spread over imported cotton exceeding 1,000 yuan. This may encourage quota-holding mills to increase foreign cotton purchases, but it also squeezes domestic cotton sales.
From a yarn perspective, lower cotton prices help reduce raw material costs for spinners, but the key question is whether end-user orders will recover. Downstream grey fabric sales remain sluggish, with weaving mill operating rates at around 60%, limiting willingness to restock. If cotton prices stay weak, mills may adopt a hand-to-mouth procurement strategy, further reducing market liquidity.
Macro Headwinds: Demand Concerns Behind Jobs Data
The US June employment report is worth watching closely. The sharp miss on job creation temporarily eased rate hike fears and boosted equities, but from a cotton consumption perspective, weak employment signals potentially softer support for end-user apparel demand. As the world's largest textile importer, any marginal change in US consumption will ripple up the supply chain.
Modest oil price increases provide some support for synthetic fiber alternatives, but this is unlikely to alter the cotton market's supply-demand dynamics in the near term. ICE cotton futures positioning shows speculative long positions are declining, with no fresh catalysts on the horizon.