【Wdoodoo Weekly Cotton Report】Macro Sentiment Recovery & Heatwaves in Growing Zones Push Cotton Higher from Lows

July 10, 2026

WDD-Global

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Guide

Highlights at a glance

Domestic cotton futures and spot prices surged last week, driven by fading US rate hike expectations, anticipated domestic growth-stabilizing policies, and heatwave concerns in Xinjiang. The CF09 contract rose to RMB 16,290/ton, while the CC Index 3128B reached RMB 17,490/ton. Improved macro sentiment followed downward revisions to US nonfarm payroll data, easing inflation expectations, and supportive signals from China's Lujiazui Forum. In addition, mixed global cotton supply dynamics and El Niño forecasts fueled uncertainty, while high temperatures in Xinjiang disrupted local crop growth, intensifying speculative buying activity. Despite weak short-term demand in the textile sector due to the offseason, medium-to-long-term support arises from expanding Xinjiang spinning capacity, destocking of domestic inventories, and resilient demand from Southeast and South Asia. The overall outlook remains cautiously optimistic, with key factors including reserve cotton auction policies, weather risks, and potential order upticks during the September-October peak season. Technically, support lies at 16,000, with resistance at 16,450.

Domestic cotton futures and spot prices surged sharply last week. The CF09 contract closed at RMB 16,290/ton, rising RMB 585/ton week-on-week; CC Index 3128B settled at RMB 17,490/ton, up RMB 560/ton from the previous week. With macro bearish factors fading and high temperatures prevailing in Xinjiang growing regions, Zhengzhou cotton found solid support above recent lows.

1.Fading US rate hike expectations plus anticipated domestic growth-stabilizing policies

Middle East geopolitical risks eased. U.S. nonfarm payroll data was revised sharply downward. Kevin Walsh noted a notable decline in inflation expectations, cooling market bets on interest rate hikes within this year, which lifted sentiment across commodity markets.

Domestically, multiple growth-supportive policies were signaled at the Lujiazui Forum. Intensified central government field surveys recently fuel expectations of incremental stimulus measures. Markets await policy tone-setting at the Politburo meeting scheduled at end-July. The macro environment is likely to remain supportive for cotton prices in July.

2. Mixed overseas supply signals; market trades on heatwave risks in Xinjiang

Fundamentals vary across major overseas producers. USDA reports show U.S. new-crop cotton planting area rose 6% year-on-year as of end-June, a 2% upward revision versus the March planting intentions report. The drought index in Texas improved substantially, which may prompt USDA to lift production forecasts; Brazil also revised up its cotton output outlook.

Nevertheless, weather disruptions require continued monitoring. Monsoon rainfall in India is roughly 40% below seasonal averages, delaying planting progress and threatening yield potential. The World Meteorological Organization forecasts that El Niño will strengthen into a strong event between July and September 2026.

In China, cotton has entered the critical flowering and boll-setting stage. High temperature and water shortage in July constitute potential risks. Persistent extreme heat damage in Xinjiang during the week weighed on cotton growth and triggered weather-related speculative buying. That said, crop conditions diverge sharply across regions; cotton fields with timely irrigation maintained relatively stable growth.

3.Textile industry stays in off-season yet rigid demand holds resilience

Short-term demand remains evidently weak amid the traditional low season. Operating rates for yarn and grey fabric mills kept sliding month-on-month. Downstream inventories of yarn and finished goods kept accumulating, and more small-scale factories implemented production cuts. Textile enterprises conducted rigid restocking on dips. However, rising Zhengzhou cotton prices last week subdued physical trading activity, leading to lower raw material inventories at spinners.

Rigid demand should offer medium-to-long-term support, underpinned by expanding spinning capacity in Xinjiang and continuous destocking of domestic commercial cotton inventories. Purchasing demand from Southeast and South Asia remains robust, while markets expect order recovery during the peak season of “Golden September & Silver October”.

Overall Outlook Expectations for U.S. interest rate hikes have cooled, supporting improved macro sentiment. El Niño is set to intensify; local heat damage hit Xinjiang cotton, while monsoon precipitation in India fell sharply year-on-year. Domestic commercial inventories keep declining, and overall cotton supply remains tight for the current marketing year. Still, weak off-season demand, wide domestic-overseas cotton price gaps and expectations of state reserve cotton auctions cap upside in the near term.

Technically, cotton prices broke above the prior consolidation range. The trading strategy favors buying on dips. Key support stands at 16,000, with resistance near 16,450. Going forward, priority monitoring covers growing-region weather at home and abroad, implementation of reserve cotton auction policies, and order recovery in the textile peak season in August.

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【Wdoodoo Weekly Cotton Report】Macro Sentiment Recovery & Heatwaves in Growing Zones Push Cotton Higher from Lows