The supply and demand balance of China's cotton market is undergoing subtle shifts. The latest data from the Ministry of Agriculture and Rural Affairs shows that the supply and demand situation for the 2025/26 season remains unchanged from the previous month, but the planting area and total output expectations for Xinjiang cotton in 2026/27 have both been revised upward, signaling a potential loosening on the supply side.
Sales Rate Hits New High, but Off-Season Inventory Pressures
As of May 28, the national cotton cumulative sales rate reached 96.2%, up 8 percentage points year-on-year and 16.4 percentage points higher than the four-year average. This data indicates that destocking of the 2025/26 cotton season has accelerated significantly, with strong downstream demand in the early period. However, entering June, the traditional off-season effect in the textile industry has begun to manifest, with spinning mills generally holding low raw material inventories and shifting to a just-in-time procurement strategy. This means that despite the impressive sales rate, market transaction activity may decline in the short term, limiting upward price potential. For buyers, the current low inventory status suggests that once demand picks up, restocking needs could be concentrated, potentially pushing prices higher.
Xinjiang Cotton Output Forecast Revised Up: Area Up, Yield Down
The planting area forecast for Xinjiang cotton in 2026/27 has been revised upward by 120,000 hectares (1.8 million mu) to 2.873 million hectares (43.1 million mu), with total output expected to increase by 190,000 tons to 6.34 million tons. This adjustment is based on the fact that the actual reduction in Xinjiang cotton planting area was less than previously expected. However, the yield per mu forecast has been slightly reduced by 2 kg to 147 kg, mainly due to adverse weather conditions such as low temperatures and sandstorms in Xinjiang during the early period. Overall, the upward revision in total output is primarily driven by area expansion rather than yield improvement, reflecting the ongoing scale effect of Xinjiang cotton cultivation. Future expansion of planting area will depend on water resource constraints and agricultural policy guidance.
18,600 Yuan Target Price: A Three-Year Policy Anchor
On the policy front, the target price for Xinjiang cotton from 2026 to 2028 has been set at 18,600 yuan per ton, with fixed subsidies for 5.1 million tons of output. This policy framework provides a clear price anchor for cotton farmers and the entire industry chain, helping to stabilize planting expectations. Unlike previous floating subsidies, the fixed-output subsidy model emphasizes efficiency and encourages high quality and high yield. For processors and traders, this means a relatively clear cost floor for the next three years, facilitating long-term procurement and inventory strategies.
Industry Impact: Supply Easing Expectations vs. Demand Dynamics
The upward revision of 2026/27 output to 6.34 million tons, combined with persistently high sales rates, suggests that domestic cotton supply may gradually move toward easing. However, uncertainties remain on the demand side: low inventory levels during the textile off-season may suppress short-term procurement, while international market acceptance of Xinjiang cotton remains an export variable. For downstream weaving enterprises, raw material cost volatility risks are reduced, but they need to be vigilant about price fluctuations triggered by concentrated demand recovery after the off-season.