【Wdoodoo Weekly Cotton Report】Growing macroeconomic divergence leaves cotton without bullish catalysts

June 16, 2026, 4:59 PM

WDD-Global

6871

Guide

Highlights at a glance

Cotton prices experienced volatility last week, initially declining before rebounding slightly, with an overall downward trend due to global tightening expectations and weak industrial catalysts. The USDA made minimal changes to U.S. cotton supply-demand projections, while baseline demand for yarn and fabrics helped stabilize utilization rates. However, the off-season slowdown led to inventory builds, tighter margins, and cautious restocking by textile firms. Market sentiment was further dampened by proposed U.S. textile tariffs, although easing Middle East tensions offered slight relief. In the near term, ZCE cotton faces resistance at 15,900 and support at 15,500, making a cautious approach advisable. Medium-term El Niño-related supply risks and tight supply-demand dynamics could drive price surges in Q3, presenting potential long-term buying opportunities around the 15,300 level. Key factors this week include geopolitical tensions, U.S. drought conditions, and downstream consumption trends.

Cotton prices fell first then rebounded last week, with the overall price center moving down. ZCE Cotton CF09 settled at RMB 15,765/ton, down RMB 150 week-on-week; 3128B cotton spot closed at RMB 16,935/ton, a weekly drop of RMB 135. Mounting global tightening expectations and a lack of bullish industrial catalysts kept cotton range-bound.

Contrary to market expectations, the USDA made no material revisions to U.S. cotton supply-demand balances for the new marketing year. It only lifted U.S. cotton export estimates for MY25/26 marginally, trimming ending stocks by 43,000 tons MoM to 806,000 tons.

3. Off-Season Orders Slump Markedly, Yet Baseline Demand Offers Support

Overall yarn operating rates and 100% cotton grey fabric utilization rates have stabilized, underpinned by rigid downstream demand. Lower cotton prices have boosted trading activity in physical cotton markets.

Nevertheless, the downstream off-season is clearly evident. Spinning mills continue to build up inventories of cotton and yarn, while composite staple fiber fabric stocks keep accumulating. Yarn mill profit margins are squeezed amid sharply weaker order books, leaving textile firms highly cautious about restocking.

Separately, the Trump administration has proposed a new tariff plan that could impose an extra 12.5% duty on textile products, stoking market risk aversion.

Comprehensive Outlook，Global tightening expectations remain elevated, and the U.S. plan for new textile tariffs weighs on commodity sentiment. However, tentative detente in the Middle East may ease recession-driven bearish trades. Weather bullish bets have cooled, and downstream consumption has entered its seasonal lull, leaving limited bullish industrial catalysts. Still, baseline rigid demand provides mild support.

In the short term, ZCE cotton will face resistance on rallies. Key resistance sits at 15,900, with support at 15,500; a wait-and-see stance is recommended. Over the medium to long term, El Niño-related supply risks remain in play, with definite yield losses projected domestically and overseas. Demand retains resilience, and tight supply-demand balances leave room for price surges in Q3. Longer-term investors may watch for buying opportunities once prices stabilize around the 15,300 support level.

Key Monitoring Factors This Week

1.Sustainability of geopolitical tensions in the Middle East

2.Drought conditions across U.S. cotton belts

3.Downstream end-consumption performance

【Wdoodoo Weekly Cotton Report】Bearish macro factors weigh on the market while industrial drivers remain weak, with cotton testing its downside support levels.

【Wdoodoo Weekly Pulp Report】Beneath the bearish consolidation, bulls are quietly building positions.