15,838 yuan per tonne. That was the settlement average for the Zhengzhou cotton futures front-month contract last week, down another 176 yuan from the prior week—yet it also marked the first sign of stabilization after weeks of grinding declines. The China Cotton Price Index B, representing standard-grade lint in the domestic market, stood at 17,378 yuan per tonne, a drop of 1.3%, while the international cotton index (M) translated into an import cost of 15,171 yuan per tonne, down 1.8%. Both domestic and international prices touched bottom in tandem, but the pace of decline clearly narrowed. The market is searching for a new pricing anchor.
The Tug-of-War Between Price Bottoms and Cost Support
Domestic cotton prices briefly hit a more than five-month low last week. The core pressure came from expectations of a supply surge as the new crop hits the market, compounded by persistently lackluster downstream demand. Xinjiang's cotton boll-opening progress has exceeded 80%, weather conditions are generally favorable for picking, and scattered buying has begun in some areas. The mainstream purchase price for machine-picked seed cotton stabilized at 7.0–7.3 yuan per kilogram after falling.
This price range deserves attention: Zhengzhou cotton futures are now close to the lower bound of the cost curve, meaning room for further sharp declines is narrowing. Ginning factories show divergent buying attitudes—some with funds in place remain confident, while individual ginners facing financing constraints are turning cautious. The industry expects a higher proportion of "short, flat, fast" trading operations. For upstream ginners, controlling the pace of purchases will directly determine whether the new season repeats the old script of "scramble to buy, then lose money."
Internationally, a strong dollar and rising expectations of another Federal Reserve rate hike this year continue to suppress commodity valuations. Five-year and ten-year U.S. Treasury yields have broken through the 5% mark, and market expectations for a 25-basis-point hike in October have risen to about 67%. ICE cotton futures settled at an average of 83.12 cents per pound, edging down 0.3%.
Policy Variables: From Tariff Consensus to Reserve Sales Halt
The China-U.S. high-level interactions from September 23 to 25 produced an eight-point consensus, including a $30 billion reciprocal tariff reduction arrangement, progress on the Trade Council mechanism, and an extension of the Kuala Lumpur trade consultation outcomes. This阶段性 easing helps improve the export environment for the cotton textile sector, but specific implementation details of the tariff arrangement have not yet been published. Market sentiment remains cautious before the outcomes are implemented.
Domestic policy has also released signals. On September 22, the Ministry of Industry and Information Technology and other departments issued the "15th Five-Year Plan for the Light Industry and Textile Industry," proposing that by 2030, the operating revenue of above-scale enterprises should strive to exceed 30 trillion yuan. It deploys key tasks including enhancing industrial innovation capacity, improving supply-demand adaptability, and accelerating intelligent and green transformation. On the same day, Premier Li Qiang emphasized during a Shanghai inspection the deepening of "AI plus manufacturing." In the medium to long term, these policies benefit the upgrading of the cotton textile supply chain and optimization of demand structure, but in the short term, they are unlikely to reverse the supply-demand landscape.
A more direct market variable comes from reserve cotton. On September 25, the China National Cotton Reserve Corporation announced that central reserve cotton sales for 2026 would stop from September 30. As of September 24, cumulative reserve cotton transactions exceeded 398,000 tonnes, with a weekly transaction rate of 99.90%, up 6.83 percentage points from the prior week, and an average transaction price of 16,607.55 yuan per tonne, down 208.46 yuan from the previous week. The halt means the market will lose an important marginal source of supply, providing阶段性 support to market sentiment.
Demand Side: The Transmission Logic of a Weak Peak Season
The textile market has performed平平. Domestic C32S combed yarn averaged 23,650 yuan per tonne, edging down 0.2%; the same specification from major import sources averaged 23,520 yuan per tonne, down 0.4%; conventional imported yarn is 130 yuan per tonne cheaper than domestic yarn. Polyester staple fiber fell 213 yuan per tonne to 8,671 yuan, and the substitution effect of chemical fibers continues to suppress room for cotton demand.
Cotton yarn sales are generally stable, with局部 volume declines. Spinning enterprises maintain strong price-supporting sentiment, but downstream acceptance is weak, and willingness to stockpile is not strong. This means yarn mills' profit margins are being squeezed from both ends: upstream cotton costs are supported, but the ability to pass on price increases downstream is insufficient. If orders do not pick up in October, some small and medium-sized yarn mills may be forced to cut prices to destock, which in turn would suppress cotton prices.
Internationally, U.S. cotton export signings have rebounded significantly. For the week ending September 17, net export signings for U.S. upland cotton in the 2026/27 season reached 52,300 tonnes, more than tripling from the prior week; shipments were 37,400 tonnes, up 16%. However, cumulative signings for the current season remain below the five-year average, and the sustainability of demand remains to be seen. On the supply side, the U.S. cotton good-to-excellent rating was revised down 2 percentage points week-on-week to 34%, lagging the previous year by 13 percentage points. The Texas main producing area has only an 18% rating, with severe drought pressure. However, the national harvest pace has accelerated, with a 13% harvest rate, 2 percentage points faster than the five-year average, limiting the threat of production cuts. Brazil's cotton exports in August reached 106,000 tonnes, up 37.3% year-on-year, continuously adding to globally tradable resources.