Price trend

According to data from the SunSirs commodity market analysis system, as of June 5, the domestic spot price for Grade 3128B lint cotton was quoted at 17,785 RMB/ton, down 0.74% from the previous day.

In the futures market, the settlement price for the dominant Zhengzhou cotton contract was 16,020 RMB/ton, down 2.03% from the previous day; the overnight settlement price for the dominant ICE cotton futures contract was 78.49 cents per pound, down 2.02 cents from the previous day.

Market analysis

In the domestic market, the characteristics of the off-season for downstream textiles have become more pronounced. As of early May, total national commercial cotton inventories had fallen to 4.1685 million tonnes—a month-on-month decrease of 132,300 tonnes—with Xinjiang’s commercial cotton stocks dropping to just 2.9729 million tonnes, signaling a marked acceleration in the destocking pace. However, port inventories of cotton have rebounded; as of June 4, total stocks of imported cotton at major ports stood at 612,500 tonnes, up 0.46% week-on-week. The traditional June off-season slump has intensified: existing orders are being wrapped up and delivered while new orders remain scarce, leading to rising inventory levels for both yarn mills and traders; consequently, most products can only be moved by offering price concessions on confirmed orders.

The sharp decline in international cotton prices was triggered by factors from multiple fronts. Recent increases in precipitation across U.S. cotton-growing regions have significantly alleviated market concerns regarding drought. As of June 2, the proportion of U.S. cotton-growing areas affected by drought had dropped to 87% from 94% the previous week; although this figure remains far higher than the 6% recorded during the same period last year, the easing of drought conditions over two consecutive weeks caused the previously accumulated "weather premium" to dissipate rapidly.

Market Outlook:

In the short term, the cotton market is likely to continue fluctuating within a specific range. Key variables to monitor include the pace of a substantive recovery in new downstream orders, the impact of high temperatures and pest/disease outbreaks during the boll-setting stage in Xinjiang, and the future direction of US-China trade policy.

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