Cotton futures on the Intercontinental Exchange (ICE) pulled back on July 8 after a sharp rally, as the active December contract fell 0.62 cents to settle at 80.67 cents per pound. This correction was largely technical, following a nearly 5-cent gain over the previous seven to eight sessions that sent prices to a one-month high. Profit-taking intensified, and a temporary strengthening of the US dollar added downward pressure.
Background Market participants showed caution above the 80-cent level. Industry observers noted that when prices reached the 81.50 to 82.00 cent range, mill buying appetite waned noticeably, with many buyers stepping aside. This price zone has been tested multiple times as a resistance band in recent weeks. In neighboring markets, CBOT soybeans also fell on profit-taking, while a nearly 5% surge in crude oil provided some support for cotton, as higher oil prices increase the production cost of polyester — a synthetic substitute — potentially benefiting cotton demand.
Industry Impact The market is now focused on two key USDA reports due this week: Thursday's weekly export sales data and Friday's World Agricultural Supply and Demand Estimates (WASDE) report. The former will reveal whether recent export momentum has slowed amid price volatility, while the latter will provide updated global supply and demand balances for the new season. On the crop side, US cotton conditions deteriorated, with the good-to-excellent rating falling to 46%, down from 48% the previous week and well below 52% a year ago. Although the squaring rate rose to 49%, slightly above the five-year average, the persistent decline in crop conditions threatens yield potential and provides underlying support for forward prices.
For China's textile supply chain, this pullback temporarily reduces import costs, particularly for mills relying on US cotton for high-count and combed yarns. However, the tug-of-war around 80 cents reflects deep divergence: supply faces weather uncertainties, while demand contends with a slowing global economy. Textile enterprises should watch the 80-cent level closely — a decisive break below could trigger further selling, while a hold may open a new window for restocking.