The cotton price spread between domestic and international markets widened by over 400 yuan/ton in just one week—a figure that deserves more attention than the price movement itself. With domestic cotton priced 2,181 yuan/ton above international levels, the raw material procurement logic for textile enterprises is being rewritten: imported cotton's cost-effectiveness is increasingly evident, while domestic cotton's competitiveness faces a stern test.
Price Trends: International Decline Outpaces Domestic
According to China Customs data and industry public data, the Zhengzhou cotton futures main contract settled at an average of 16,673 yuan/ton this week, down 295 yuan/ton or 1.7% from the previous week. The China Cotton Price Index B, representing standard-grade lint in the domestic market, averaged 18,060 yuan/ton, down 137 yuan/ton or 0.8%. The domestic decline was relatively moderate, but the directional trend is clear.
Internationally, the New York cotton futures main contract settled at an average of 86.97 cents/lb, down 2.31 cents/lb or 2.6% week-on-week. The International Cotton Index (M), representing the landed price of imported cotton at Chinese main ports, averaged 96.42 cents/lb, equivalent to an import cost of 15,879 yuan/ton—down 566 yuan/ton or 3.4%. The international decline was nearly double the domestic drop, directly widening the spread from 1,752 yuan/ton to 2,181 yuan/ton.
What does this mean? For mills relying primarily on imported cotton, the cost advantage is expanding. But for factories dependent on domestic cotton, their product competitiveness in international markets is being eroded. If the spread persists, it could further suppress demand for domestic cotton.
The yarn market shows a divergence: domestic yarn is stronger than imported. Domestic C32S combed yarn averaged 23,708 yuan/ton, up 64 yuan/ton or 0.3% week-on-week. Imported C32S combed yarn from major source countries averaged 23,715 yuan/ton, essentially flat. The premium of imported yarn over domestic has narrowed to just 7 yuan/ton, nearly erasing previous premiums. Polyester staple fiber rose 285 yuan/ton to 8,447 yuan/ton—the substitution effect of chemical fibers over cotton warrants continued monitoring.
Supply Side: New Crop Pricing Looms, Production Cut Expectations Cool
Xinjiang cotton boll-opening progress has reached nearly 50%, faster than last year, with scattered purchasing already beginning in some areas. According to field research by the National Cotton Market Monitoring System, major production areas including Alar, Bazhou, and Aksu show no significant production declines, with overall output expected to be flat or slightly lower year-on-year. This contrasts with previously over-traded production cut expectations—weather premiums are being gradually corrected.
Ginners plan to begin purchasing around September 20, with machine-picked cotton opening prices expected at 7.0-7.6 yuan/kg, notably above last year's 6.3-6.4 yuan/kg. Purchasing sentiment is cautious, and concerns about repeating the 2023 "rise then fall" pattern are not unfounded—high opening prices mean higher scramble-purchasing costs for ginners. If downstream orders fail to follow through, loss risks will transmit from the purchasing end upstream.
On the international front, the USDA September supply and demand report cut 2026/27 U.S. cotton production by 89,000 tons to 2.874 million tons, but the reduction fell short of market expectations and provided no fresh bullish catalyst. 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 drought coverage expanding further from the previous week. Production cut expectations remain objectively strong, but marginal momentum has clearly diminished.
Brazil's cotton harvest is entering its final stage, with a harvest rate of 89.4% as of the week ending September 4, 2.5 percentage points faster than last year. Market production forecasts cluster around 4.02-4.5 million tons, with another high-yield season expected—potentially offsetting U.S. production cuts to some extent. The global cotton supply landscape has not seen substantial tightening.
Reserve cotton sales entered their 8th week, with the subscription rate failing to reach full capacity for the first time, dropping to 99.35%, while the average transaction price edged lower. As of September 11, central reserve cotton cumulative sales exceeded 320,000 tons. Mills are bidding rationally based on orders and quality requirements, replenishing on demand rather than chasing prices. The decline in subscription rate is a warning signal—it reflects mills' increasingly conservative judgment on future price trends.
Demand Side: Export Resilience Persists, Domestic Recovery Lags
Downstream mill operating rates are stable with slight increases. New orders have improved marginally but remain limited, corporate profits continue to face pressure, and raw material procurement is primarily need-based replenishment. Peak-season order volumes falling short of expectations is a core logic behind current cotton price pressure.
Export data provides one of the few supports. Customs data shows August textile and apparel exports reached $28.57 billion, up 7.7% year-on-year, maintaining above 7% growth for the third consecutive month. This offers some boost to consumption expectations, but the structural divergence between export growth and weak domestic demand persists. The stability of export orders depends on the sustainability of overseas restocking cycles and substantive progress in China-U.S. trade negotiations.
At the macro level, China and U.S. trade teams are negotiating a $30 billion reciprocal tariff reduction framework. Market expectations suggest the tariff reduction list is likely to cover apparel, footwear, home goods, and textiles. If implemented, this would directly benefit end-user demand in the cotton textile supply chain. However, negotiations are ongoing, and the timeline and final list remain uncertain—short-term boosts to cotton prices are more sentiment-driven than order-driven.
U.S. August core CPI rose 0.3% month-on-month, above the expected 0.2% and the largest monthly gain in four months. Following the data release, market expectations for a September Fed rate hike rose to nearly 90%. Tightening financial conditions weigh on commodity valuations, with geopolitical disruptions and rate hike expectations jointly pressuring risk appetite.
Domestic policy releases marginal positives. August CPI rose 0.8% year-on-year, core CPI rebounded to 1.0%, and PPI growth expanded to 3.8%. Upstream cost transmission is strengthening, but terminal consumption recovery remains slow. The "Financial Powerhouse Construction 15th Five-Year Plan" was officially released, explicitly calling for "improving futures market product layout and enhancing commodity price influence," and disclosing that consumer loan interest subsidies supported approximately 1.88 trillion yuan in resident consumption in the first seven months. If related policy directions are gradually implemented, they may marginally improve financing conditions, risk management, and terminal consumption expectations for the cotton textile supply chain.