China's cotton imports reached 1.585 million tons in the 2025/26 season, a year-on-year surge of 50.7% — an increase of more than 500,000 tons. This figure reflects not merely recovering demand but a structural rebalancing of supply chains driven by policy quotas, price spread dynamics, and shifting origins. For textile mills, securing the most cost-effective cotton source in the new season will determine who holds the upper hand in cost competition.
Quota Releases and Price Spreads: The Twin Engines
In August 2025 and March 2026, authorities released two rounds of sliding-scale tariff import quotas totaling 500,000 tons, directly opening procurement channels for mills. Meanwhile, the domestic-international cotton price spread remained elevated throughout the year, giving imported cotton a clear cost advantage.
China Customs data shows that from January to August 2026, cumulative cotton imports reached 1.107 million tons, up 88.9% year-on-year — far exceeding the annual average growth rate. However, monthly trends showed a clear front-loaded pattern: after hitting a single-month peak of 205,000 tons in January 2026, restocking slowed progressively. August imports fell to 80,000 tons, down 12.1% month-on-month though still up 10.7% year-on-year.
Three factors explain the pullback. First, the domestic textile market entered its traditional off-season, with mills shifting to hand-to-mouth purchasing. Second, continued auctions from central reserve stocks substituted for some imported cotton demand, particularly among smaller mills with insufficient quotas. Third, rising international cotton prices narrowed the price spread, eroding imported cotton's appeal. The quota dividend is nearing exhaustion; future import volumes will depend more on spreads and actual order demand.
Origin Landscape Reshaped: Brazil Leads, Australia Holds Premium, US Retreats
The origin ranking shifted significantly in 2025/26. Brazilian cotton surged 68.2% year-on-year, capturing 49% market share — up 5 percentage points — to claim the top spot. Its supply stability and cost-effectiveness made it the preferred choice for bulk procurement.
Australian cotton grew 46.2%, holding 26% share. Australia's competitiveness lies not in price but in quality — its fiber length and consistency suit high-end home textiles and combed fabrics, earning sustained preference from large and medium mills. In August, Australian arrivals reached 60,000 tons, up 9.5% month-on-month, accounting for over 70% of monthly imports — a 14-percentage-point increase — underscoring rigid demand for premium cotton from high-end orders.
US cotton continued its contraction, falling 12.9% annually to just 9% share, down 6 percentage points. August US imports of 7,000 tons, while up 12.6% month-on-month, were on a very low base. US cotton is being squeezed from both sides by Brazil and Australia, and a short-term reversal appears unlikely.
Notably, Central Asian cotton from Kazakhstan and others grew 1.5-fold, raising its share to 5% as the fourth-largest source. This reflects a broader trend: amid geopolitical logistics and cost considerations, Chinese mills are diversifying origins to reduce dependence on any single region.
Trade Modes and Price Signals: Bonded Channels Dominate, Cost Center Rises
Structural shifts in trade modes deserve attention. In 2025/26, bonded supervision warehouse imports grew 62.7%, accounting for 40% and ranking first; special customs supervision zone logistics goods grew 89.1%, accounting for 32%. Together they exceeded 70% of total imports, indicating mills increasingly leverage bonded warehousing for flexibility and capital efficiency. General trade fell to 18%, and processing trade with imported materials to 10% — traditional modes are being displaced.
On pricing, August imported cotton averaged $1,911/ton, up 3.4% month-on-month and 4.9% year-on-year. By origin: Brazilian at $1,685/ton (+1.6% MoM); Australian at $1,933/ton (+0.5% MoM), holding firm; US at $2,237/ton (+6.1% MoM but down 41% YoY due to a high base). US production cuts and weather disruptions are the main drivers pushing international prices higher, and the cost center for imported cotton is shifting upward.
Global Supply-Demand Tightening: Procurement Logic Must Be Rebuilt
USDA September data shows 2025/26 global cotton consumption at 26.373 million tons, exports at 9.924 million tons (+7.5% YoY), and ending stocks at 16.396 million tons with a stock-to-use ratio of 62.2% — revised down from mid-year estimates. More critically, 2026/27 projections show production at 25.543 million tons against consumption of 26.763 million tons — a deficit of roughly 1.22 million tons — with ending stocks falling to 15.21 million tons and the ratio dropping to 56.8%.
What does tightening supply-demand mean? For mills, the margin for error in raw material procurement will narrow significantly. The window for low-priced cotton will not last long; locking in long-term contracts and planning ahead becomes more important.
Australia's supply outlook warrants particular attention. In 2025/26, Australian cotton exports totaled approximately 1.217 million tons, up 7.3% year-on-year, with China as the largest importer at 440,000 tons, or 36.1%. However, according to ABARES, 2026/27 Australian production is projected at just 679,000 tons, down 34% due to dry weather and reduced irrigation water. This means premium combed fabric producers need to find alternatives or adjust their cotton blend structures in advance.
Downstream exports also show divergence. August textile and apparel exports reached $28.57 billion, up 7.6% year-on-year but down 0.8% month-on-month. Textile exports of $12.69 billion grew 2.8% month-on-month, driven by Northern Hemisphere autumn-winter order deliveries and overseas restocking; apparel exports of $15.88 billion fell 3.5% month-on-month. Cumulative January-August exports reached $203.37 billion, up 3.1% year-on-year. Textiles outperforming apparel benefits upstream yarn and fabric producers.