US cotton production estimates were cut, yet futures fell sharply — a seemingly contradictory move that reveals a deeper shift in how the cotton market is being priced. On September 11, the ICE December cotton contract settled at 86.06 cents per pound, down 2.45% on the day. The USDA's September supply and demand report lowered the 2026/27 US cotton production estimate to 13.2 million bales, a reduction of 410,000 bales from August, but the market found no support in that revision. Instead, long positions were liquidated en masse.
Why Ample Supply Expectations Outweighed the Output Cut
The USDA also trimmed its forecast for US cotton ending stocks from 4.0 million to 3.6 million bales, which on the surface looks like a tightening signal. Traders read it differently: yields declined in the Delta and Southwest regions but edged up in the Southeast and West, leaving the overall supply picture without a meaningful deficit. More importantly, global ending stocks remain at historically elevated levels, and a modest production cut is not enough to reverse the expectation of ample supply.
From an industrial transmission perspective, this means the raw material side lacks a sustained upward driver. For Chinese textile mills, if foreign cotton prices lose upward momentum, the comparative advantage of imported cotton will need to be reassessed. Buyers need not rush to lock in forward shipments; the spot market is likely to remain range-bound with a downward bias in the near term.
What Does China's Zero Buying Signal?
The USDA's weekly export sales report showed that for the week ending September 3, current-crop US upland cotton net sales rose to 73,854 bales, up 168% from the prior week. But beneath the headline, net sales to China were zero, and zero again for the next crop year. US upland cotton shipments for the week totaled 177,774 bales, down 6% week-on-week, with only 450 bales shipped to China.
China's continued absence is the biggest structural variable in US cotton export data. As the world's largest cotton consumer and importer, China's purchasing pace directly influences US cotton export expectations and the pricing center. The zero purchases reflect both the regulatory role of domestic reserve cotton rotations and sliding-scale tariff quotas, and a rational choice by textile enterprises after the price spread between domestic and foreign cotton narrowed. For US cotton traders, without Chinese buying support, the sustainability of the export sales rebound is questionable.
The Substitution Effect of Oil and Polyester Cannot Be Ignored
News that the Middle East may restart a new round of negotiations weighed on international oil prices on the day. Although crude was still on track for a weekly gain of more than 8%, the single-day decline directly lowered polyester fiber production costs. Cotton and polyester staple fiber are substitutes in yarn production. When lower oil prices drag down polyester raw material costs, downstream spinning mills tend to increase the chemical fiber proportion in their cotton blending.
This substitution logic exerts medium-term pressure on cotton prices. For mills producing pure cotton yarn, order competition will intensify; for blended yarn and chemical fiber fabric factories, lower raw material costs are a阶段性 positive. Industry chain profits are shifting from the cotton end toward the chemical fiber and downstream weaving segments.
The Spot-Futures Divergence Deserves Attention
On September 11, the Cotlook A Index stood at 98.20 cents per pound, up 100 points, diverging from the ICE futures decline in the short term. Firm spot prices indicate that currently tradable high-grade cotton resources remain relatively tight. The futures drop reflects adjustments at the expectation level rather than a deterioration in immediate supply and demand.
For buyers, this divergence means pricing opportunities may arise when futures overshoot to the downside, rather than from spot prices actively falling. Factories should closely monitor basis changes and lock in raw material costs when futures discounts widen.
The Response Rhythm of Industrial Clusters
Foreign trade enterprises in industrial clusters such as Keqiao, Shengze, and Nantong currently face the core problem of low order visibility. Although weaker US cotton prices reduce raw material costs, overseas brands are cautious in placing orders and the restocking cycle is lengthening. Enterprises should not simply bet on falling raw materials, but focus on delivery management and exchange rate locking.