SunSirs: Cotton Prices, Both Domestic and International, Rose Initially and Then Fell Last Week

Last week, domestic and international cotton prices followed a trend of initial gains followed by a decline. The domestic downstream textile market has entered its traditional off-season; while India's announcement to waive cotton import tariffs briefly boosted market confidence, a marginal easing of drought conditions in major U.S. cotton-producing regions limited the upside potential for prices. According to data from the SunSirs commodity market analysis system, as of June 8, the spot price for domestic Grade 3128B lint cotton stood at 17,582 RMB/ton, down 0.39% from the previous Monday.

Domestic Market

According to data from the National Cotton Market Monitoring System, as of June 4, the national cotton processing rate stood at 99.9%, remaining flat year-on-year and matching the average of the past four years. The national sales rate reached 96.2%, up 8.0 percentage points year-on-year and 16.4 percentage points higher than the four-year average.

The growth of the new cotton crop is generally proceeding well. Temperatures across Xinjiang gradually rose last week, accelerating cotton growth as the crop entered a critical stage characterized by the simultaneous progression of vegetative and reproductive growth. While commercial cotton inventories continued to decline, textile enterprises remained cautious about restocking. The downstream textile market remains in its off-season; orders are gradually weakening, and enterprises show limited willingness to build up stocks.

International Developments

The Indian government has decided to waive the 11% basic import duty on cotton from June 1 to October 31, 2026. As the world's second-largest cotton producer, India faces a significant imbalance where domestic production falls short of demand; addressing this supply-demand gap is the primary driver behind the policy. While the removal of import duties has boosted market confidence, a marginal easing of drought conditions in key U.S. cotton-growing regions has limited the potential for price increases. As of June 2, the proportion of drought-affected areas in major U.S. growing regions had dropped to 87%, a decrease of 7 percentage points from the previous week.

Last week, the average settlement price for the ICE benchmark contract was 79.44 cents per pound, up 0.59 cents from the prior week, while the average settlement price for deferred-month contracts was 80.67 cents per pound, up 0.28 cents..

Overall Outlook

Tightening domestic cotton supply provides a floor for prices, yet demand support remains limited due to the market's off-season, and there is a lack of clear drivers for supply and demand in the short term. Cotton prices are expected to fluctuate with a downward bias in the near term. Moving forward, key factors to monitor include weather conditions during the planting season, the implementation details of US-China tariffs, and policies regarding state cotton reserves.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.