The sudden chill in US cotton exports is sending a clear signal through the global textile supply chain: downstream procurement pace is slowing. According to the latest weekly USDA export sales data for the week ending June 25, total net sales of upland cotton stood at only 93,118 bales, with current marketing year sales plunging 42% week-over-week and 70% below the four-week average. More notably, net sales to China were a mere 5,518 bales, while next-marketing-year sales to China were zero.
Behind these numbers lies a short-term price stalemate around 77 cents per pound. The most-active ICE December cotton futures contract fell 0.92% to 77.12 cents/lb on July 2. Despite a sharp weakening of the US dollar following weak employment data, the export-side weakness completely overshadowed any currency support. The market is signaling clearly: demand-side contraction expectations are now driving pricing power.
Export Collapse and Price Range Reshaping
From an industry perspective, the cliff-like drop in export sales is not an isolated event. Current marketing year upland cotton export sales of 49,001 bales represent a 42% decline week-over-week and a 70% decline from the four-week average, far exceeding normal seasonal fluctuations. The assessment from Georgia-based cotton broker Keith Brown deserves attention: prices are expected to trade in a 75-80 cents/lb range in the near term. This suggests that the current price near 77 cents has not yet bottomed.
The zero-sales figure for next year to China is particularly noteworthy. As the world's largest cotton importer, China's purchasing rhythm directly impacts the floor support for international cotton prices. The zero sales indicate that Chinese buyers have no appetite to lock in prices at current levels, likely relying on domestic reserve cotton or waiting for lower prices. This behavior itself will further suppress US cotton export expectations.
Why Dollar Weakness Failed to Boost Cotton
Typically, a weaker dollar supports dollar-denominated commodity prices, but the cotton market did not follow this pattern on July 2. The US June employment report showed only 57,000 new jobs added, well below the expected 110,000, causing the dollar to fall sharply. Yet ICE cotton still closed lower.
This indicates that the core contradiction has shifted from currency-driven to demand-driven. Textile mills, especially in Southeast Asia and China, are facing a dual pressure of sluggish end-order recovery and rising finished goods inventories. Procurement is focused on destocking and wait-and-see, rather than active replenishment. This 'buy on the way up, not down' mentality is amplified in a downward price channel.
Transmission Impact on the Supply Chain
For spinning mills, the window for lower imported cotton costs is opening. The 75-80 cents/lb range means that if prices approach 75 cents, it would be a good opportunity for price fixing or hedging. However, note that the current Cotlook A index stands at 86.55 cents/lb, nearly 10 cents above futures, reflecting that actual available supply costs remain high.
For fabric and apparel buyers, the room for cotton yarn price adjustments will depend on the landed cost of cotton. If US cotton continues to weaken, domestic Chinese cotton prices will face competitive pressure from imports, potentially driving down prices for mainstream yarn counts like Ne 32 and Ne 40. It is recommended that buyers lock in low-cost raw materials in batches before the traditional peak season in August-September, rather than making large one-time purchases.