When US cotton export sales fall into negative territory, the demand backdrop of the global cotton market becomes clear. The latest USDA weekly report shows that net export sales of upland cotton for the 2025/26 season were -12.7 thousand tons, a sharp decline from the previous week and the four-week average, hitting an annual low; shipments were 50.5 thousand tons, down 5% week-on-week and 7% below the four-week average. This data is not an isolated fluctuation but a direct reflection of weak global textile consumption on the trade side.
Event Background
Negative sales mean that cancellations exceeded new sales in that week, which is particularly sensitive at the end of the season. Usually, late July is a critical period for new crop growth in the Northern Hemisphere and the start of stocking for autumn/winter orders. The turn to negative at this time indicates that overseas buyers' willingness to accept high-priced cotton is clearly insufficient. The simultaneous decline in shipments further confirms the weakness of actual demand fulfillment, rather than just a change in the pace of signings.
From the perspective of industrial clusters, China, as the world's largest cotton importer, directly influences market sentiment through its purchasing pace of US cotton. Currently, domestic textile enterprises generally maintain low raw material inventory strategies, purchasing on a need-to-use basis, and their reliance on imported cotton changes dynamically with the domestic-foreign price spread. The weakening of US cotton export data means that the upward pressure on foreign cotton prices increases, and import cost expectations subsequently fall, providing a bearish guide for domestic spot cotton prices.
Industrial Impact
The cotton market bears the brunt first. Pressure on foreign cotton prices will directly lower the arrival cost of imported cotton, while domestic spot prices lack a basis for independent strength amid dull demand. On the futures side, the Zhengzhou cotton contract is likely to follow the external market in weak fluctuations, but the downside space is limited by new crop planting costs and policy reserve expectations, so excessive bearishness is not advisable. For traders holding inventories, the risk of basis weakening needs attention.
The transmission chain to cotton yarn is more direct. Cotton accounts for about 70% of the production cost of cotton yarn. A loosening of cotton prices will weaken cost support, while downstream weaving and apparel enterprises currently have mainly short and urgent orders, with limited acceptance of higher yarn prices. Cotton yarn spot prices are expected to be under slight pressure, and futures will also be weak, but the decline may be smaller than that of cotton, as spinning mills have thin profit margins and strong willingness to support prices.
For buyers, this signal means that bargaining space may open up periodically. If foreign cotton prices continue to weaken, the price gap between imported and domestic cotton yarn may narrow, and some weaving factories using imported yarn can moderately adjust their procurement sources. At the same time, exchange rate fluctuations in the RMB and changes in shipping costs will also affect actual arrival costs, requiring comprehensive calculations rather than simply looking at quoted prices.
Practical Recommendations
For Buyers - Monitor weekly US cotton export data and shipment progress. If negative signings continue, appropriately delay large purchases and wait for better price windows. - Compare actual arrival costs of imported and domestic cotton, flexibly switch procurement sources based on exchange rate and freight fluctuations. - For cotton yarn procurement, keep short-term orders and avoid hoarding; use futures hedging to lock in future costs.
For Foreign Trade Enterprises - When quoting export orders, reserve a buffer for cotton price fluctuations to avoid forced price cuts due to short-term raw material price declines. - Pay attention to the demand recovery pace in major export markets. If US cotton signings remain sluggish, it may indicate weak overseas consumption, so be cautious in accepting long orders. - Use forward foreign exchange tools to hedge exchange rate risks and prevent profit erosion from RMB appreciation.
In summary, the negative turn in US cotton exports is a clear signal of weak demand, but not an absolute sign of trend reversal. Before the new crop comes to market, weather speculation and policy variables remain, so cotton-related commodities are likely to maintain range-bound fluctuations with limited trend opportunities. Enterprises should focus more on inventory management and cost control rather than betting on unilateral trends.