In the second week of March, under the influence of macro and fundamental factors, ICE cotton futures rebounded continuously.

From the demand side, the US government’s foreign tariffs have brought more uncertainty to the US economy, leading to a decline in the US dollar index, which has improved the competitiveness of US cotton exports and stimulated the procurement demand in the international market. Meanwhile, the latest supply and demand forecasts from the US Department of Agriculture have also raised global cotton consumption. From the supply side, the USDA expects that the United States cotton planting area in 2025 will decrease year-on-year, triggering market concerns about the supply of cotton in the United States, resulting in the willingness to speculate in the futures market to increase.

As of March 14, the ICE cotton futures workhorse May contract closed at 67.37 cents, up 1.97%. However, the long-term trend of cotton prices still failed to get rid of the downward trend. Cotton prices are down more than 20 percent from a year earlier.

From the downstream point of view, in February, the United States clothing imports increased, buyers continue to catch up before the imposition of tariffs on Chinese goods to build inventories, this advance purchase temporarily increased the demand for textiles and clothing, to the short-term cotton prices to bring upward momentum. In the longer term, however, the outlook for cotton demand remains uncertain, with the US government preparing to impose reciprocal tariffs on India and Vietnam from April. In the absence of a new bilateral agreement, these moves will affect US textile imports from key Asian suppliers, reducing demand for cotton in the supply chain.

In recent days, China has increased its government budget deficit in order to stimulate domestic economic growth. While the move could theoretically boost industrial production and boost consumer spending, the impact on textile demand remains to be seen. At present, China’s domestic cotton market is still in a loose supply pattern, and high cotton inventories continue to put pressure on cotton prices. Although in the case of the arrival of the “gold three silver four”, the opening probability of some textile mills has risen to a high, but the overall demand of the garment industry has not yet shown signs of sustained recovery. Textile and apparel exports continued to come under pressure, falling 4.5 per cent in the first two months of the year from a year earlier, complicating the outlook for demand.

The Indian and Pakistani markets are dealing with a possible trade diversion. The Indian cotton market remains depressed, and uncertainty about future textile and apparel exports to the United States has increased. In the week ending March 15, the domestic S-6 price rose slightly to Rs 53,500 / kander, up 0.94% in a single week, but still down nearly 17% year-on-year. Pakistan’s cotton market is also facing weaker demand for textile exports, with the Karachi Grade 3 cotton spot price Index falling to Rs 17,000 / maud, a weekly decline of 1.73%. Although the depreciation of the Pakistani rupee has made textile exports more competitive, the downturn in global textile demand has limited its export growth.

Looking ahead, despite the recent rebound in cotton futures, the market remains sensitive to shifts in the macroeconomic environment and uncertainty over trade policy. While the decline in the US dollar index temporarily stimulated cotton demand, the continued imposition of tariffs in the United States and the uncertainty of consumption recovery may put pressure on cotton prices to stabilize in the long term. The market will closely monitor economic data and trade conditions to assess the sustainability of the current cotton price rally.