The chill of the textile off-season is clearly reflected in June's cotton price data. According to the latest monthly report from the China Cotton Association, the CC Index monthly average in June stood at 17,547 yuan/ton, down 242 yuan month-on-month, a decline of 1.36%. Although still up 2,729 yuan year-on-year, prices oscillated repeatedly during the month, with two rally attempts failing, eventually closing at 17,554 yuan/ton at month-end, about 2% below the early-month high of 17,899 yuan/ton.
Off-Season Effect Suppresses Demand, Inventory Pressure Transmits Upstream
June's price movements showed a clear three-phase pattern, but the core logic throughout was insufficient downstream orders. After a brief spike to 17,899 yuan/ton early in the month, textile mills' willingness to replenish raw materials quickly faded, pulling prices down to 17,336 yuan/ton by June 12. Persistent high temperatures in Xinjiang in mid-June triggered expectations of reduced cotton output, combined with tight commercial inventories, pushing prices back to 17,632 yuan/ton. However, in the latter half of the month, finished product inventories at textile mills accumulated, operating rates gradually declined, and falling crude oil prices strengthened the substitution effect of chemical fibers, further contracting downstream procurement and weakening prices again.
This trajectory indicates that supply-side narratives—whether weather risks or inventory drawdowns—cannot independently support prices at this stage. The real determinant is demand: when textile mills themselves face shrinking orders and narrowing margins, their raw material procurement strategies inevitably turn conservative, capping any upside for prices.
Industry Chain Divergence Deepens: Large Mills at Full Capacity, Small Mills Under Pressure
Beneath the surface of falling cotton prices, divergence within the textile chain is intensifying. The report shows that pure cotton yarn prices rose only 0.24% in June, with 32s combed cotton yarn averaging 23,333 yuan/ton. However, this average masks a first-half rise followed by a second-half decline. More notably, order intake varied sharply: large and medium-sized mills generally had full order books, while small mills faced scarce orders and accumulating finished goods. This 'fire and ice' scenario suggests that industry capacity rationalization is still underway, with the operational pressure on SMEs transmitting to the raw material side.
Meanwhile, substitution effects are at play. Polyester staple fiber closed at 7,250 yuan/ton at month-end, down 525 yuan month-on-month, a decline of 6.8%; viscose staple fiber closed at 14,300 yuan/ton, up 200 yuan. The relative price advantage of chemical fibers is diverting some demand from cotton, further weakening the floor under cotton prices.
Domestic-Foreign Price Gap Widens, Imported Cotton Gains Competitiveness
On the international front, the ICE cotton futures主力 contract averaged 77.77 cents/lb in June, down 4.46 cents/lb month-on-month, a decline of 5.4%. The FC Index M averaged 86.69 cents/lb, down 6.79% month-on-month. The domestic-foreign price spread widened to 3,179 yuan/ton at end-June, expanding by 618 yuan from the previous month.
This spread level means that for mills with import quotas, using imported cotton offers a significant cost advantage. However, global markets face multiple uncertainties: India's temporary exemption of cotton import tariffs, proposed new U.S. tariffs, easing Middle East tensions, and improving weather in U.S. growing regions. These variables make international cotton prices more volatile than domestic ones, adding risk to import procurement decisions.
Futures-Cash Spread Narrows, Market Sentiment Turns Cautious
Zhengzhou cotton futures remained range-bound in June, with the主力 contract averaging 15,944 yuan/ton, down 313 yuan month-on-month. The futures-cash spread narrowed to 1,474 yuan/ton at month-end, 51 yuan narrower than the previous month. This narrowing suggests that market divergence on future prices is decreasing, but the bias is bearish—buying momentum is weak, and expectations of reserve cotton releases continue to cap futures prices.
The long-staple cotton market was similarly subdued, with 137-grade long-staple cotton averaging 26,930 yuan/ton, down 107 yuan month-on-month. Mills' strategy of procuring only against orders and avoiding inventory accumulation has become the mainstream approach.