ICE cotton futures have dropped to their lowest point in over four years, following China’s decision to impose a 34% tariff on U.
S. imports. This move threatens to significantly reduce demand from China, which accounts for 25% of U.
S. cotton exports. As a result, cotton prices fell sharply, with the May 2025 contract closing at 63.
36 cents per pound, down 1.44 cents from the previous day.
The decline in cotton prices is exacerbated by other economic factors, including a stronger U.S. dollar, which makes cotton more expensive for international buyers, and falling crude oil prices, which reduce polyester prices—a direct competitor to cotton in the textile industry. These combined pressures have weakened the global cotton market, leading to bearish expectations.
The U.S. cotton industry now faces the potential loss of its largest buyer, China, as the tariff takes effect on April 10, 2025. The impact of the tariff, coupled with an improved U.
S. crop outlook due to favorable weather in West Texas, is creating a challenging environment for cotton producers. Despite these challenges, ICE Certified Stocks remain unchanged, indicating that there is no immediate reduction in available supply.
In summary, the combination of trade tensions, unfavorable economic factors, and China’s tariff shock has led to a sharp decline in cotton futures, signaling a turbulent period ahead for the cotton market.
