The price gap between domestic Chinese cotton and international cotton has widened to 2,181 yuan per ton, up 429 yuan from the previous week. For export-oriented textile mills, this structural divergence in raw material costs is no longer a short-term disturbance but a hard constraint shaping order strategies.
Price Trends: Both Markets Weaken, Yet the Gap Widens
Zhengzhou cotton futures settled at an average of 16,673 yuan/ton this week, down 295 yuan or 1.7% week-on-week. The China Cotton Price B Index for standard-grade lint averaged 18,060 yuan/ton, down 0.8%. Internationally, ICE cotton futures averaged 86.97 cents/lb, falling 2.6%, while the International Cotton Index (M) converted to RMB landed cost stood at 15,879 yuan/ton, down 3.4%. International prices fell faster, directly pushing the price gap from 1,752 yuan to 2,181 yuan.
This structure sends a clear signal to buyers: the import cotton value window is opening. However, the 1% tariff landed cost excludes port charges and freight, so actual costs will be higher. Whether the price advantage translates into actual procurement depends on quota policy and order quality requirements.
Yarn markets show domestic strength versus foreign weakness. Domestic C32S combed yarn averaged 23,708 yuan/ton, up 0.3%, while imported yarn of the same specification averaged 23,715 yuan/ton, essentially flat. The premium of regular imported yarn over domestic yarn has narrowed to just 7 yuan/ton. Polyester staple fiber rose 285 yuan to 8,447 yuan/ton, reinforcing the substitution effect of chemical fibers at the raw material level.
Supply Side: Production Cut Expectations Fade, Brazil Offsets U.S. Shortfall
The U.S. cotton good-to-excellent rating fell 5 percentage points week-on-week to 34%, with nearly 60% of producing areas still affected by drought and the affected range expanding. However, the USDA September supply and demand report only cut 2026/27 U.S. cotton production by 89,000 tons to 2.874 million tons, within market expectations. The previously over-traded weather premium is being corrected.
Brazil's cotton harvest rate has reached 89.4%, 2.5 percentage points ahead of last year. Market production forecasts cluster around 4.02-4.5 million tons, suggesting another high-yield season that could effectively offset the U.S. shortfall. Global cotton supply and demand have not tightened substantially.
Domestically, Xinjiang cotton boll-opening is nearly 50% complete, faster than last year. Surveys in Alar, Bazhou, and Aksu found no significant production declines, with overall output expected to be flat or slightly lower year-on-year. Ginning factories plan to begin purchasing around September 20, with machine-picked cotton opening price expectations at 7.0-7.6 yuan/kg, notably above last year's 6.3-6.4 yuan/kg. Purchasing sentiment is cautious, with widespread concern about repeating 2023's "rise then fall" pattern.
Reserve cotton sales entered their eighth week, with the transaction rate failing to reach full subscription for the first time, dropping to 99.35%. The average transaction price fell slightly week-on-week. As of September 11, cumulative sales exceeded 320,000 tons. Mills are bidding rationally based on orders and quality needs, reflecting downstream pessimism about future prices.
Demand and Macro: Export Resilience Persists, But Margin Pressure Remains
August textile and apparel exports reached $28.57 billion, up 7.7% year-on-year, marking the third consecutive month above 7% growth. This provides some support for consumption expectations, indicating overseas orders have not collapsed. However, while mill operating rates have risen steadily, new order improvement is limited, profit margins remain under pressure, and raw material procurement is mainly just-in-time replenishment.
On the macro front, U.S. August core CPI rose 0.3% month-on-month, above the expected 0.2%, pushing market expectations for a September Fed rate hike to nearly 90%, weighing on commodity valuations. China-U.S. trade teams are negotiating a $30 billion reciprocal tariff reduction framework, with the list likely covering apparel, footwear, home goods, and textiles, providing marginal support to cotton market sentiment. China's "Financial Power Construction 15th Five-Year Plan" was officially released, clarifying the improvement of futures market product layout. Consumer loan interest subsidies supported approximately 1.88 trillion yuan in consumer spending in the first seven months. If policies gradually materialize, they could improve financing conditions and terminal consumption expectations for the cotton textile supply chain.
In the short term, international cotton prices lack upward momentum, with U.S. harvest-season supply pressure emerging, likely maintaining a weak and range-bound trend. Domestically, with new crop purchasing imminent, the game between purchase prices and production cut expectations will dominate the market, with Zhengzhou cotton likely range-bound.