ICE cotton futures for December delivery fell 0.64 cents, or 0.79%, to settle at 80.87 cents per pound on July 14. The decline followed China's official announcement of state reserve cotton sales, which triggered profit-taking after prices had rallied the previous week. Market participants had largely anticipated the release, and the confirmation led to a sell-off. Meanwhile, the USDA raised its 2026/27 US cotton production estimate by 400,000 bales to 13.7 million bales, and global supply was revised up by 300,000 bales, reinforcing a bearish supply outlook.
Background
China National Cotton Reserves Corporation announced on July 14 that it would begin selling a portion of its state reserve cotton on each national business day starting July 20. The daily sales volume will be adjusted based on market conditions. This move had been widely expected, and traders took profits after the official statement. StoneX senior broker Valentin Olah noted that the market had already priced in the release, leading to the correction.
The USDA's July supply and demand report raised US production estimates for the 2026/27 season by 400,000 bales to 13.7 million bales, while global supply increased by 300,000 bales, adding further pressure on prices.
Industry Impact
The reserve cotton sales will provide short-term relief for Chinese textile mills facing high domestic-import price spreads. If the release pace is sustained, it could weigh on domestic spot prices and reduce demand for imported cotton. The USDA's supply upgrade reinforces a global surplus narrative, capping international prices.
Brazil's Conab reported 2025/26 cotton output at 4.0598 million tonnes, down 0.5% year-on-year, while planted area fell 3.2% to 2.0186 million hectares, indicating reduced farmer interest. If acreage continues to shrink, global supply could tighten in the medium term.
ICE deliverable stocks fell to 121,285 bales as of July 13, down 5,842 bales from the previous session, suggesting increased physical delivery demand amid the price drop.