When US cotton net export sales turn negative, the supply-demand balance in the global cotton market is shifting subtly. The latest USDA weekly report shows that for the 2025/26 marketing year, net upland cotton export sales fell to -12.7 thousand tons in the last week of July, a yearly low, with shipments of 50.5 thousand tons down 5% from the previous week. This data not only reflects shrinking overseas purchasing appetite but may also signal a shift in domestic cotton pricing logic.
The Truth Behind the Numbers
Negative signings mean cancellations exceeded new contracts, which is unusual in cotton trade and typically signals a sharp deterioration in demand. Compared with the four-week average, the sharp decline is not a one-week fluctuation but a confirmation of a weakening trend. The simultaneous drop in shipments indicates that previously sold orders are also being executed more slowly, raising the risk of port inventory accumulation.
For the domestic market, as a major import source, weak US cotton exports directly pressure overseas quotes, thereby lowering the expected cost of imported cotton. If the price gap between imported and Xinjiang cotton narrows further, the cost advantage of imported cotton will diminish, and some mills may switch to domestic cotton. However, under weak overall demand, such substitution is unlikely to reverse the downward price pressure.
Transmission Paths in the Industry Chain
For raw cotton, the bull-bear score has dropped to -1, indicating bearish sentiment. Falling import cost expectations, coupled with high domestic commercial inventories, leave spot prices unsupported. In the futures market, the Zhengzhou cotton contract will likely fluctuate weakly in line with overseas markets, but caution is needed: if the decline is too rapid, it may trigger concentrated point-price transactions, providing short-term support.
For cotton yarn, the core logic is the weakening of cost support. Every 1% drop in cotton prices reduces theoretical yarn costs by about 0.8%, but actual selling price adjustments are often lagging and smaller, meaning mills' profit margins may temporarily expand. However, weak global textile and apparel demand implies insufficient terminal orders, leaving no basis for yarn price increases; destocking through price cuts may become the mainstream strategy. For buyers, this may be a window to replenish at low prices, but inventory levels should be controlled cautiously.
Event Impact and Market Expectations
The deterioration in US cotton export data is essentially a microcosm of the slowdown in purchasing from major consumer countries such as China, Vietnam, and Bangladesh. As the largest buyer, China's procurement strategy adjustments often have a decisive impact on US cotton exports. If Sino-US trade policies or quota releases change later, signings may rebound, but short-term demand weakness is unlikely to reverse.
For the textile industry chain, this signal means raw material costs are entering a downward channel, but downstream demand recovery will take time. Enterprises should pay more attention to hedging cost risks through exchange rate fluctuations and logistics efficiency rather than simply betting on single-direction price movements.