China's domestic cotton prices experienced a volatile rally-and-retreat pattern in May. Early in the month, tight supply expectations and concentrated restocking pushed the CCIndex 3128B to a 2.5-year high of 18,211 CNY/ton. However, as the textile off-season took hold, order books thinned and mill operating rates declined. Commercial inventory at the end of May stood at 3.745 million tons, 8.3% higher year-on-year, adding downward pressure. By late May, prices had fallen back to near the opening level. The monthly average price was 17,789 CNY/ton, up 23.1% year-on-year and 3.6% month-on-month.
Off-season impact: slower yarn output, squeezed margins
National Bureau of Statistics data showed May yarn output at 1.869 million tons, up just 2.7% year-on-year and down 1% month-on-month. Xinjiang contributed 319,000 tons, up 18.6% year-on-year but down 3.6% month-on-month, indicating that even the rapidly expanding Xinjiang capacity is feeling the demand slowdown. The average price of 32s pure cotton yarn was 23,277 CNY/ton, up 795 CNY/ton from April, but the gain lagged behind cotton, compressing mill margins.
Mill purchasing behavior turned cautious, focusing on hand-to-mouth restocking. Industrial cotton inventory fell 3.5% month-on-month to 846,000 tons, down 10.1% year-on-year, reflecting resistance to high raw material costs. Commercial inventory, while down 13.3% from April, was still 8.3% higher than a year earlier, indicating persistent supply-side pressure.
Imports plunge, domestic-international spread narrows
Customs data showed May cotton imports at 113,000 tons, down 31.7% month-on-month. Although still up 2.3 times year-on-year, the sharp monthly decline signals that off-season weakness has reached the import market. Brazilian cotton accounted for 57.7% of imports, while US cotton's share rose to 22.1%. Cumulative imports for Jan-May reached 825,000 tons, up 91% year-on-year, but the pace is slowing.
Internationally, the Cotlook A index averaged 92 US cents/lb, up 6.5% month-on-month. After adding 1% tariff, the landed price was 2,270 CNY/ton below domestic cotton, narrowing the spread by 257 CNY from April. The USDA May report raised global 2025/26 production to 26.702 million tons, consumption to 26.156 million tons, and ending stocks to 16.823 million tons, all at multi-year highs. This suggests ample global supply will continue to weigh on prices and provide an alternative for Chinese mills.
Regional seedling divergence: Xinjiang stable, inland under pressure
By end-May, national cotton planting progress reached 99.5%, slightly behind last year. Xinjiang completed planting, but the Yellow River and Yangtze River basins were 1.4 and 6.9 percentage points behind, respectively. Persistent rainfall in inland regions caused waterlogging, slowing seedling growth. Only 45.9% of surveyed farmers rated seedlings as better than last year, a sharp 34-percentage-point drop. While some Xinjiang fields have entered the budding stage, overall seedling condition is worse than last year, potentially limiting later yields.
Industry conference signals: reshaping global cotton landscape
The 2026 China Cotton Industry Development Summit Forum was held in Chongqing on May 28-29, with the theme 'Change and Reconstruction: Shaping a New Global Cotton Pattern.' Nearly 400 delegates from government, international cotton organizations, traders, and brands attended. Topics included macro policy, industrial chain collaboration, and risk management. The forum also launched a cotton product origin evaluation initiative, signaling the industry's push for standardization and traceability to enhance the bargaining power and brand value of domestic cotton amid trade uncertainties.