Cotton and Cotton Yarn Futures Fall in Morning Trading, Signaling Pressure on Textile Raw Materials

On the morning of July 17, 2026, China's futures market saw a broad-based decline in textile raw material contracts. The main cotton contract (2609) closed at 15,770 points, down 2.14%, leading the sector lower. Cotton yarn (2609) fell 1.55% to 22,235 points. Polyester staple fiber, PTA, and bottle-grade chips also weakened, with losses ranging from 0.22% to 0.70%. This marks the most concentrated intraday decline for textile raw materials since the start of July.

Supply and Demand Pressure

From a structural perspective, this sell-off is not a surprise. On the supply side, weather conditions in Xinjiang's cotton-growing regions have been stable, and the new crop is developing faster than last year, supporting expectations of a bumper harvest for the 2026/27 season. Meanwhile, imported cotton arrivals remain high, with port inventories piling up. The market consensus is that supply is ample.

On the demand side, concerns are more acute. Spinning mill operating rates have been declining since late June, especially in Jiangsu, Zhejiang, and Shandong provinces, where small and medium-sized weaving mills report weak new orders. Some have cut operating rates to below 70%. Cotton yarn traders are struggling to destock, and restocking appetite is low. The simultaneous decline in cotton and cotton yarn futures essentially reflects the market's pricing of weak real demand—terminal garment export orders have yet to show a clear recovery.

Chemical Fiber Chain Weakens

The decline in PTA, polyester staple fiber, and bottle-grade chips further confirms the weakness across the entire textile chain. PTA (2609) fell 0.28% to 5,708 points; polyester staple fiber dropped 0.22%; bottle-grade chips posted the largest loss at 0.70%. As the upstream feedstock for polyester filament, PTA's weakness directly lowers the cost expectations for chemical fiber fabrics.

For weaving mills, this means already thin processing margins could be further compressed. The price ratio between cotton and chemical fibers is shifting—cotton is falling faster, narrowing the cotton-polyester spread. This may prompt some mills to adjust blending ratios in favor of more polyester. For export-oriented textile companies, the combination of renminbi exchange rate volatility and rising shipping costs is also dampening risk appetite on the procurement side.

Cautious Short-Term Approach

The current futures market decline offers clear signals for physical procurement. Textile companies should avoid large-scale stockpiling in a falling market, especially for cotton and cotton yarn. Inventory cycles should be kept to within 15 days. For chemical fibers, PTA and polyester staple fiber have limited downside but insufficient upside momentum, making just-in-time purchasing the prudent strategy.

Key risks to watch include potential extreme weather in Xinjiang in late July and any changes in the national reserve cotton release policy. If the government signals a reserve purchase or rotation, a short-term bounce could occur. Meanwhile, further renminbi depreciation would benefit textile exports, indirectly boosting raw material demand.

For Buyers - Adopt a "small batch, high frequency" procurement strategy for cotton and cotton yarn to avoid building positions in a downtrend. - Watch key technical support levels: 15,700 for cotton (2609) and 22,000 for cotton yarn (2609). A break below could trigger accelerated declines. - For blended products, consider increasing the proportion of chemical fibers to hedge against cotton price volatility.

For Exporters - With raw material costs at a cyclical low, consider negotiating fixed-price forward orders with overseas clients to lock in margins. - Use forward exchange contracts to manage renminbi exchange rate risk. - Monitor end-demand inventory data from the US and Europe. If destocking accelerates, restocking orders may materialize by late Q3, potentially stabilizing raw material prices.