International cotton prices strengthened again in mid-August, with the ICE December futures contract posting a weekly gain of about 0.5%—its fourth consecutive weekly rise—settling at 84.80 cents per pound. This momentum stems from a combination of extreme weather in key growing regions and resilient export demand, not merely short-term speculative news. For domestic textile mills, the sustained firmness in external cotton prices is quietly reshaping the price spread between imported and domestic cotton, thereby influencing raw material procurement strategies for the second half of the year.
Weather and Demand: The Two Pillars
The U.S. southern cotton belt is experiencing extreme heat with scant rainfall, stressing crops and threatening yields. If production falls short, expectations of a tighter global supply will be reinforced. Meanwhile, the latest USDA export sales report showed net sales of 904,989 bales for the 2026/27 marketing year, significantly exceeding market expectations, with shipments of 140,451 bales already recorded in the first week of August, indicating strong overseas demand for U.S. cotton.
The robust export data was interpreted as a delayed positive reaction to the report—prices initially rallied, then pulled back, and eventually recovered to close higher. This volatile pattern highlights that the market is in a sensitive zone: weather premiums are accumulating, while demand support remains intact. Notably, the sales include both new-crop and some old-crop carryover, suggesting that restocking demand across the global textile chain is still being released.
El Niño and Macro Variables: Amplifying Supply Risks
This year’s El Niño is expected to be relatively strong, significantly altering global rainfall patterns, which could have a notable impact on cotton-growing regions. For buyers, this means not only monitoring weather in core U.S. areas like Texas but also watching precipitation in supplementary regions such as Brazil and Australia—any anomaly could trigger a spike in international prices. Additionally, a weaker U.S. dollar and firmer crude oil prices provide indirect support on both cost and currency fronts.
ICE deliverable stocks fell to 75,985 bales, down nearly 1,800 bales from the previous day, further validating a tight physical market. When inventories are low, prices become more sensitive to unexpected news, amplifying volatility. For domestic textile enterprises, the correlation between external stock data and arrivals of imported cotton deserves daily monitoring as a supplementary indicator.
Transmission to Domestic Chains and Responses
The consecutive rise in international cotton prices will directly increase the cost of imported cotton, thereby affecting price expectations for domestic yarn and grey fabric. Currently, the domestic cotton market is relatively stable, but the narrowing of the internal-external price spread may prompt some enterprises to shift procurement focus to domestic cotton or lock in forward import orders earlier. For export-oriented textile and apparel companies, rising raw material costs will compress profit margins, requiring more cautious calculations of exchange rate and raw material volatility when taking orders.
From downstream feedback, the expectation of higher cotton prices is beginning to transmit to the yarn and fabric segments, with some companies testing price increases. However, the recovery in end-consumer demand is limited, and whether price hikes will be accepted remains uncertain. Therefore, enterprises are advised not to chase prices blindly but to lock in raw materials in batches and proportions based on their order cycles, avoiding the financial pressure of one-time concentrated purchases.