The global cotton market is undergoing a fresh price adjustment. On July 9, imported cotton quotes at China's main ports edged lower, with the International Cotton Price Index (SM) falling to 90.92 cents per pound, down 0.61 cents from the previous session. Converted at a 1% tariff, the landed price for general trade was approximately 15,226 yuan per ton. While the decline is modest in magnitude, it is reshaping cost expectations across the textile supply chain when coupled with persistent weakness in the domestic futures market.
Cost Transmission and Futures Resonance
The dip in imported cotton quotes directly pulls down the cost anchor for domestic cotton. Under general trade terms, the landed price of imported cotton is now about 700 yuan per ton lower than the main Zhengzhou Cotton Exchange contract, creating a clear price advantage. This cost gap will pressure domestic lint cotton spot quotes through substitution effects, particularly competing directly with Xinjiang cotton and other local varieties.
More notably, sentiment in the futures market is turning bearish. On July 9, the main Zhengzhou Cotton Exchange contract (2609) closed at 15,930 yuan per ton, down 245 yuan from the prior day, with open interest declining by 34,680 lots. A shrinking open interest typically signals long-position capital exiting, reinforcing the market's pessimistic outlook. Under the interplay of futures and spot markets, the foundation for supporting domestic cotton spot prices is weakening.
Downstream Pressure Cascades
Price pressure is cascading step by step along the supply chain—from raw cotton to lint cotton to cotton yarn. The weakness in imported cotton and Zhengzhou cotton directly erodes cost support for lint cotton, with its bull-bear score turning to -1. Lint cotton traders face passive destocking pressure, and some small- to medium-sized ginning mills have begun lowering factory-gate quotes to secure orders.
Although the negative impact on cotton yarn is relatively moderate (bull-bear score: -0.5), the loosening of raw material costs is already pressuring spinning mills. Cotton yarn prices remain elevated, but once cost support collapses, downstream weaving mills and garment manufacturers will demand price cuts. If cotton prices continue to decline, cotton yarn prices may face catch-up downside risks.
Procurement Strategies Turn Cautious
Faced with a downward price trend, textile mills are shifting their raw material procurement mindset. In the past two months, some companies actively built inventories in anticipation of peak-season demand. However, the concurrent decline in imported and domestic cotton prices now threatens inventory values. Most companies have adopted a 'hand-to-mouth' purchasing strategy, minimizing in-transit and warehousing stocks.
This wait-and-see attitude, in turn, exacerbates market liquidity shortages, creating a negative feedback loop of 'price falls—procurement waits—price falls further.' For large cotton-textile enterprises reliant on imported cotton, current prices may seem attractive, but the cost advantage could quickly narrow if exchange rates fluctuate or international supply-demand dynamics shift.