On May 11, 2026, ICE cotton futures for July delivery closed at 87.77 cents/lb, surging 3.59% to hit the highest level since April 2024. This price spike is not an isolated event but the result of converging signals from energy costs, capital sentiment, and supply-demand fundamentals. For the textile industry, cotton breaking out of its two-year range means procurement cost logic is being rewritten.
Energy Cost Transmission: The Cotton-Polyester Substitution Game
International oil prices rose nearly 3% on the same day, directly inflating raw material costs for the polyester chain. There is a clear substitution relationship between polyester staple fiber and cotton—when higher oil prices make polyester more expensive, cotton's relative cost advantage emerges. Behind this rally, the risk of closure in the Strait of Hormuz and the volatility of US-Iran ceasefire negotiations are core variables. The uncertainty in the crude oil market is unlikely to dissipate soon, meaning polyester costs will remain elevated, providing sustained support for cotton prices. For buyers of blended fabrics, the cotton-polyester price spread has narrowed to a six-month low, making pure-cotton products more competitive again.
Capital Sentiment Signal: Speculative Net Long Positions Hit New High
CFTC data shows that for the week ending May 5, speculators increased their net long positions in ICE cotton futures and options by 12,977 contracts to 79,676 contracts. This position size is in the high range of the past year, indicating a clear bullish market outlook. However, concentrated speculative inflows amplify price volatility, and if expectations fail to materialize, the risk of long liquidation rises simultaneously. Notably, ICE deliverable stocks remained at a relatively high 182,000 bales, suggesting no squeeze conditions—the rally is more about premium pricing than physical tightness.
Supply-Demand Fundamentals: Dual Support from Planting Progress and Export Expectations
USDA's weekly report shows that as of May 10, U.S. cotton planting progress reached 29%, slightly above last year's 27% and the five-year average of 28%. Although planting is ahead of schedule, market focus has shifted to the upcoming May World Agricultural Supply and Demand Estimates report. There is high expectation for improved U.S. cotton export demand, especially after the recent phase of trade détente between China and the U.S., which may accelerate Chinese purchases of U.S. cotton. If the report confirms upward export revisions, cotton prices could find a new equilibrium support in the 85-90 cents range.
Industry Impact: Transmission from Futures to Cash
The Cotlook A index rose 185 points to 94.65 cents/lb on the same day, tracking futures gains closely, but trading volumes have not yet expanded significantly. This suggests downstream textile mills remain cautious and are not panic-buying despite the sharp futures rally. For weaving and dyeing segments, rising raw material costs will compress profit margins, and if terminal order prices cannot be passed through, some small and medium mills may be forced to reduce operating rates. Regionally, the price gap between Xinjiang cotton and imported cotton is narrowing, further limiting raw material options for inland mills.