The price gap between domestic and imported cotton has widened to 2,181 yuan per tonne, up 429 yuan from the previous week. For mills, imported cotton is becoming more cost-competitive, but the purchasing decision is not getting simpler — because the expected new crop purchase price is well above last year's, reserve cotton sales fell short of full subscription for the first time, and peak-season orders have yet to be verified.
Price Signals: Weak Outside, Stable Inside
Zhengzhou cotton futures settled at an average of 16,673 yuan/tonne, down 295 yuan or 1.7% week-on-week. The China Cotton Price Index B averaged 18,060 yuan/tonne, down 137 yuan or 0.8%. International markets fell harder: ICE cotton futures averaged 86.97 cents/lb, down 2.31 cents or 2.6%, while the International Cotton Index (M) landed cost was 15,879 yuan/tonne, down 566 yuan or 3.4%.
What does this mean? Imported cotton's landed cost is 2,181 yuan/tonne below domestic cotton, and the gap is still widening. Mills using imported cotton see marginal cost relief; those reliant on domestic cotton face competitive pressure. But a wider gap is not a buying signal — it reflects mismatched supply-demand rhythms, not a trend reversal.
Yarn prices show domestic strength versus imported weakness. Domestic C32S combed yarn averaged 23,708 yuan/tonne, up 64 yuan; imported yarn of the same spec averaged 23,715 yuan/tonne, down 8 yuan. Polyester staple fiber rose 285 yuan to 8,447 yuan/tonne, strengthening the case for chemical fiber substitution. Yarn prices holding firm while cotton weakens suggests mills are drawing down raw material inventories rather than cutting prices to clear stock.
Supply Dynamics: Opening Price and Reserve Cotton
Xinjiang cotton boll-opening has reached nearly 50%, faster than last year, with sporadic purchasing in some areas. Field research by the national cotton market monitoring system shows no significant production cuts in Alar, Bazhou, or Aksu. Ginning plants plan to start buying around September 20, with machine-picked cotton expected at 7.0-7.6 yuan/kg, versus only 6.3-6.4 yuan/kg last year.
A high opening price is a risk for ginners and a cost pressure for mills. The 2023 "rise then fall" pattern has made buyers cautious, but a high opening price could force downstream to accept higher raw material costs. The key game: if seed cotton delivery is fast and processing volumes surge, spot supply pressure will concentrate in October; if farmers hold back, short-term tightness will support prices.
Reserve cotton sales entered week 8, with the subscription rate falling short of full for the first time to 99.35%, and the average price edging down. As of September 11, cumulative sales exceeded 320,000 tonnes. The decline in subscription rate shows mills are bidding rationally based on orders and quality needs, not panic-buying. This is the most authentic demand signal — downstream is not as urgent as imagined.
Internationally, the USDA September report cut 2026/27 US cotton production by 89,000 tonnes to 2.874 million tonnes, but the cut was within expectations, and global ending stocks were revised up, triggering long liquidation. US cotton good-to-excellent ratings fell 5 percentage points to 34%, with nearly 60% of producing areas affected by drought. Production cut expectations remain, but weather premium has been over-traded and marginal momentum is fading. Brazil's harvest reached 89.4%, 2.5 percentage points ahead of last year, with production forecast at 4.02-4.5 million tonnes, offsetting US cuts.
Demand Verification: Exports Steady, Domestic Slow, Policy Marginal Positive
August textile and apparel exports reached $28.57 billion, up 7.7% year-on-year, the third straight month above 7%. This boosts consumption expectations, but needs unpacking: export growth may partly come from price factors and order front-loading, not a full demand recovery. Mill operating rates are stable to slightly up, new orders improved modestly, profits remain under pressure, and raw material purchasing is need-based.
Macro-wise, August CPI rose 0.8% year-on-year, core CPI recovered to 1.0%, and PPI expanded to 3.8%, strengthening upstream cost transmission, but terminal consumption recovery is slow. China-US trade teams are negotiating a $30 billion reciprocal tariff reduction framework; if the list covers apparel, footwear, home goods, and textiles, it would marginally boost cotton market sentiment. The "15th Five-Year" financial power plan proposes improving futures market product layout and enhancing commodity pricing influence, with 1.88 trillion yuan in consumer loan interest subsidies supporting household consumption in the first seven months. Policy direction suggests marginal improvement in financing and risk management for the cotton textile chain, but implementation pace determines actual impact.
Overall, international cotton lacks upward momentum short-term, with US harvest supply pressure emerging and macro tightening expectations. Domestic new crop purchasing is imminent; the game between opening price and production cut expectations will dominate. Reserve cotton continues to supplement supply, downstream demand improvement is limited, and Zhengzhou cotton may remain range-bound. Focus on opening price and peak-season order changes.