ICE cotton futures for December delivery fell 0.64 cents to settle at 80.87 cents per pound on July 14, down 0.79%. The market was pressured by China's announcement to sell state reserve cotton starting July 20. Although the move was widely anticipated, profit-taking intensified after the official release. The USDA July report raised 2026/27 US cotton production by 400,000 bales to 13.7 million bales, and global supply was revised up by 300,000 bales, reinforcing a loose supply outlook. China's reserve sales add extra spot supply, directly capping international prices.
For Chinese mills, the reserve sales ease short-term supply gaps, especially as import quotas remain tight and the spread between domestic and international cotton stays wide. The Cotlook A index was at 90.70 cents/lb, roughly 10 cents above ICE futures. Reserve cotton at lower auction prices will attract many small and medium mills, temporarily depressing domestic spot prices but helping stabilize spinning costs. The pace of daily sales volumes will determine the market impact—gradual if controlled, disruptive if excessive.
On the supply side, Brazil's Conab estimated 2025/26 production at 4.0598 million tons, down 0.5% year-on-year, with planted area falling 3.2% to 2.0186 million hectares. Improved yields offset area reduction, keeping total supply stable. Brazil's steady output provides a floor for international prices—upside is capped without demand strength, while downside is supported by production costs.
ICE deliverable stocks fell to 121,285 bales on July 13 from 127,127 the previous day, suggesting some warrants are exiting, often interpreted as market acceptance of current prices. The dollar index weakened, and oil prices rose about 2% on renewed US naval blockade concerns against Iran, supporting risk appetite in broader commodities.