16,673 yuan per tonne. That was the average settlement price of the Zhengzhou cotton futures main contract this week, down 295 yuan from the prior week. The number itself is not dramatic, but the direction matters: after the crop-loss narrative has been chewed over repeatedly by the market, its marginal driving force has clearly faded.
Price Signals: Domestic and International Cotton Weaken in Tandem, Yet the Spread Widens
On the domestic side, the China Cotton Price Index B averaged 18,060 yuan per tonne, down 137 yuan week-on-week. Internationally, the ICE cotton futures main contract settled at an average of 86.97 cents per pound, a drop of 2.6%. The International Cotton Index (M), representing the landed price of imported cotton at Chinese main ports, averaged 96.42 cents per pound, equivalent to an import cost of 15,879 yuan per tonne, down 3.4%.
A warning sign deserves attention: domestic cotton now trades 2,181 yuan per tonne above international prices, with the spread widening by 429 yuan from the previous week. This means the comparative advantage of imported cotton is strengthening, making it more attractive for domestic mills to source foreign cotton, which in turn further suppresses the price elasticity of domestic cotton.
Yarn prices show divergence. Domestic C32S carded yarn averaged 23,708 yuan per tonne, edging up 0.3%. The same specification from major import sources averaged 23,715 yuan per tonne, essentially flat. The spread between conventional imported yarn and domestic yarn has narrowed to just 7 yuan per tonne, virtually eliminated. Polyester staple fiber rose 285 yuan to 8,447 yuan per tonne, and the substitution economics between chemical fibers and cotton continue to shift dynamically.
Supply Side: U.S. Crop Cut Falls Short, Brazilian Output Provides a Counterweight
The USDA's September supply and demand report trimmed 2026/27 U.S. cotton production by 89,000 tonnes to 2.874 million tonnes, but the adjustment did not exceed market expectations. As of September 6, 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 drought footprint still expanding. The crop-loss expectation is objectively still intensifying, but the weather premium that was previously over-traded is being corrected.
Meanwhile, Brazil's cotton harvest is entering its final stage. As of the week ending September 4, the harvest rate reached 89.4%, 2.5 percentage points ahead of the same period last year. Market forecasts for Brazilian production cluster around 4.02-4.50 million tonnes, and another high-output season is likely. The counterbalancing effect of Southern Hemisphere abundance against Northern Hemisphere losses is a key reason why international cotton prices lack further upward momentum.
Demand shows marginal improvement. For the week ending September 3, U.S. upland cotton net export sales reached 16,800 tonnes, up 10,600 tonnes from the prior week. But single-week data is volatile and insufficient to establish a trend.
Domestic New Crop: The Opening Price Game Is the Core Variable
Xinjiang cotton boll opening has reached nearly 50%, faster than last year, with scattered purchasing already starting in some areas. According to on-site surveys by the national cotton market monitoring system, no significant production declines have appeared in Alar, Bayingolin, or Aksu, and overall output is expected to be flat or slightly lower year-on-year.
Ginning mills plan to open buying around September 20, with machine-picked cotton opening prices expected at 7.0-7.6 yuan per kilogram, notably above last year's 6.3-6.4 yuan. This price range deserves deeper analysis: for ginners, a high opening price means elevated purchasing costs, yet downstream yarn prices have not risen in tandem, compressing profit margins. For farmers, high price expectations may stimulate selling enthusiasm, but there are concerns that the market could repeat the 2023 pattern of "rise first, fall later."
Reserve cotton sales entered their eighth week, with the transaction rate failing to reach full subscription for the first time, dropping to 99.35%, while the average transaction price edged lower. As of September 11, cumulative central reserve cotton sales exceeded 320,000 tonnes. The decline in transaction rate indicates that spinning mills are becoming more rational in bidding, replenishing based on orders and quality needs rather than panic buying.
Downstream, spinning mill operating rates are stable with a slight upward bias. New orders have improved marginally but only to a limited extent. Corporate profits remain under pressure, and raw material procurement is mainly need-based replenishment. August textile and apparel exports reached $28.57 billion, up 7.7% year-on-year, maintaining above 7% growth for the third consecutive month, providing some support to consumption expectations. But the bright export data contrasts with moderate domestic demand, and whether external demand resilience can persist depends on substantive progress in China-U.S. trade negotiations.
At the macro level, Middle East conflicts pushed Brent crude above $109 per barrel. U.S. August core CPI rose 0.3% month-on-month, above expectations, and market expectations for a September Fed rate hike climbed to nearly 90%. Tightening financial conditions weigh on commodity valuations. Domestically, August CPI rose 0.8% year-on-year, core CPI recovered to 1.0%, and PPI growth widened to 3.8%. Upstream cost transmission is strengthening, but terminal consumption recovery remains slow. The "Financial Powerhouse Construction 15th Five-Year Plan" proposes improving futures market product layout, and consumer loan interest subsidies supported approximately 1.88 trillion yuan in consumer spending in the first seven months. Policy directions offer marginal improvement for financing conditions and risk management in the cotton textile supply chain.