China's cotton imports delivered a far stronger performance than the market expected in 2025/26, with full-year volumes reaching 1.585 million tonnes, up 50.7% year-on-year. Behind this figure lies the combined effect of increased quota allocations and persistently wide domestic-international price spreads, though the diverging monthly rhythm suggests market momentum is shifting.
Quotas and Price Spreads: The Twin Engines
In August 2025 and March 2026, authorities issued additional sliding-scale tariff import quotas totaling 500,000 tonnes, directly opening incremental space for mills' cotton demand. Meanwhile, the domestic-international price spread remained wide, giving foreign cotton a clear price advantage and encouraging import purchases. Monthly volumes climbed steadily early in the season, peaking at 205,000 tonnes in January 2026, before restocking slowed and imports gradually declined. This front-loaded curve reflects the market returning to rationality after policy dividends were released.
August imports totaled 80,000 tonnes, down 12.1% month-on-month but up 10.7% year-on-year, extending July's downward trend. Cumulative imports for January-August 2026 reached 1.107 million tonnes, up 88.9% year-on-year. The slowdown was constrained by three factors: the domestic textile market entered its off-season, with mills buying on a hand-to-mouth basis; central reserve cotton auctions continued, substituting for some foreign cotton demand; and rising international prices narrowed the spread, eroding the price advantage of imported cotton.
Brazil Leads, Australian Cotton Surges Late
The sourcing landscape shifted significantly in 2025/26. Brazilian cotton rose 68.2% year-on-year, capturing 49% share, up 5 percentage points, ranking first. Australian cotton grew 46.2%, taking 26% share, down 1 percentage point. US cotton fell 12.9%, accounting for 9%, down 6 percentage points. Kazakhstan imports surged 1.5-fold, reaching 5% share and becoming the fourth-largest source, with Central Asian cotton's rise worth watching.
August saw a dramatic reversal: Australian cotton arrived in large volumes, favored by medium and large mills for high-end home textiles and combed fabrics, reaching 60,000 tonnes, up 9.5% month-on-month, accounting for over 70% of monthly imports. Brazilian cotton fell sharply to just 6,000 tonnes, down 66% month-on-month. US cotton reached 7,000 tonnes, up 12.6% month-on-month. This monthly source switching indicates mills are becoming more flexible in cotton blending strategies, dynamically adjusting based on order quality requirements and price windows.
By trade mode, bonded regulatory area imports grew 62.7%, accounting for 40% and ranking first. Customs special supervision area logistics goods grew 89.1%, taking 32%. General trade grew 18.4%, accounting for 18%. Processing trade with imported materials grew 3%, taking 10%. The rising share of bonded and logistics goods shows enterprises increasingly leverage bonded zones for inventory management and flexible allocation amid price volatility and order uncertainty.
Price Uptrend and Tightening Global Supply
In August, US production cut expectations and weather disruptions pushed international cotton prices higher, raising landed costs across the board. The average import price rose to $1,911/tonne, up 3.4% month-on-month and 4.9% year-on-year. Brazilian cotton stood at $1,685/tonne, up 1.6% month-on-month. US cotton reached $2,237/tonne, up 6.1% month-on-month. Australian cotton was $1,933/tonne, up 0.5% month-on-month and 9.8% year-on-year.
Downstream exports diverged: August textile and apparel exports totaled $28.57 billion, up 7.6% year-on-year but down 0.8% month-on-month. Apparel exports reached $15.88 billion, down 3.5% month-on-month but up 12.3% year-on-year. Textile exports hit $12.69 billion, up 2.4% year-on-year and 2.8% month-on-month. January-August cumulative exports reached $203.37 billion, up 3.1% year-on-year. Textile exports benefited from autumn-winter order deliveries and overseas restocking, while apparel exports lagged.
Global supply-demand is tightening. According to September USDA data, 2025/26 global cotton consumption is projected at 26.373 million tonnes, exports at 9.924 million tonnes, up 7.5% year-on-year, with ending stocks at 16.396 million tonnes and a stock-to-use ratio of 62.2%. For 2026/27, global production is forecast at 25.543 million tonnes, consumption at 26.763 million tonnes, ending stocks at 15.21 million tonnes, and the stock-to-use ratio falling to 56.8%. The tightening balance suggests international cotton prices may shift further upward.
Australia exported approximately 1.217 million tonnes in 2025/26, up 7.3% year-on-year, with China as the largest importer at 440,000 tonnes, accounting for 36.1%. However, according to ABARES, Australia's 2026/27 cotton production is expected at 679,000 tonnes, down 34% year-on-year, due to dry weather and reduced irrigation water supply. This decline will directly impact raw material supply for high-end home textiles and combed fabrics, requiring affected enterprises to secure supplies early.