Geopolitical tensions drive crude oil higher, while cotton faces potential opportunities? Increased supply of U.S. cotton may dampen upward expectations.
The international crude oil market has experienced significant volatility recently. Driven by the ongoing escalation of geopolitical tensions in the Middle East, Brent crude oil futures prices once surged to a five-month high, rekindling market concerns over potential supply disruptions. This recent strong performance in crude oil prices is being transmitted along the industrial chain to the textile raw material sector, introducing a new variable into the global cotton market.
Rising oil prices reshape the cost structure of synthetic fibers and cotton
Crude oil is one of the most important upstream raw materials in the chemical fiber industry, and the production costs of synthetic fibers such as polyester staple fiber and polyester filament are highly linked to oil prices. When oil prices rise, the production costs of polyester increase accordingly, which in turn drives up its terminal selling price. This change directly affects the raw material selection logic of textile enterprises: when the price advantage of synthetic fibers narrows, the cost-performance competitiveness of natural fiber cotton relatively strengthens.
From historical patterns, there is a relatively obvious negative correlation between oil prices and the cotton-polyester price spread. During periods of rising oil prices, the substitution effect of polyester for cotton often weakens, and some order demand may shift toward cotton, thereby providing certain support to cotton prices. Therefore, with current oil prices remaining high, the situation objectively creates a relatively favorable demand environment for the cotton market, which also becomes one of the reasons why bullish capital has been paying attention to the cotton market recently.
The pace of harvest is accelerating, and the pressure on the supply side should not be underestimated.
However, market analysts generally believe that the short-term benefits of oil prices may be offset by increased supply. This week, harvesting in major U.S. cotton regions has accelerated significantly, with the arrival of new cotton continuously increasing. According to market expectations, as the harvesting progresses, supply in the spot market will tend to loosen, which will continue to put pressure on the prices of near-month contracts.
In fact, this trend is already quite clear from the weekly crop progress report released by the United States Department of Agriculture (USDA). As of the week ending October 18, the percentage of U.S. cotton rated as good to excellent was 35%, a slight increase from 34% the previous week, reflecting that the overall growth condition of cotton this season is stable.
At the same time, cotton harvesting progress has reached 41%, significantly higher than the five-year average of 37% for the same period. This indicates that the speed at which new cotton enters the supply chain this year is relatively fast.
Amid the interplay of bullish and bearish forces, the market’s direction depends on which side prevails.
The current cotton market is experiencing a typical ‘pressure from above, support from below’ competitive pattern.
High oil prices triggered by geopolitical risks have pushed up the cost of synthetic fibers, indirectly enhancing the attractiveness of cotton demand and providing potential downside support for prices.
Faster-than-expected harvest progress and the large arrivals of new cotton have created continuous upward resistance in the spot market.
Industry analysis points out that, in the coming period, the market needs to focus on tracking two key signals:
- Geopolitical Evolution: The situation in the Middle East and its sustained impact on oil prices.
- Harvest & Weather: The actual progress of the U.S. cotton harvest and weather conditions affecting spot supply.
- Demand Markets: Purchasing pace in major consumer markets like China and India, and global macroeconomic constraints.
Overall, with short-term oil price support and supply pressure coexisting, cotton prices are likely to continue fluctuating within a range, and confirmation of a breakout direction still depends on the emergence of more fundamental signals. For enterprises across the industry chain, in a market environment of heightened volatility, reasonably using hedging tools and flexibly adjusting raw material procurement strategies may be more practical than betting on a one-sided market.
Post time: Oct-23-2026
