China's May cotton imports landed at 110,000 tons, a sharp 35% drop from April's 170,000 tons but a 214.7% surge year-on-year. The month-on-month plunge is not a sign of weakening demand but rather a normalization after heavy arrivals in April, when mills rushed to use up quotas before expiry.
Three Key Signals Behind the Numbers
Cumulative imports for Jan-May 2026 reached 830,000 tons, up 89.9% year-on-year. For the entire 2025/26 marketing year (Sept 2025-May 2026), total imports hit 1.33 million tons, a 44.6% increase. These figures confirm a clear expansion in overall import demand from Chinese mills this season.
However, the May slowdown reflects a shift in procurement rhythm. The 170,000 tons in April was an outlier driven by concentrated arrivals and quota deadlines. As those factors faded, May volumes corrected naturally.
Price dynamics also played a role. The spread between domestic and international cotton prices narrowed in May, reducing the cost advantage of imported cotton. For cost-sensitive mills, this makes import decisions more cautious.
Transmission Effects Across the Supply Chain
The drop in May arrivals eases port inventory pressure but also forces mills that rely on imported cotton to fine-tune their procurement schedules to avoid supply gaps.
For traders, the May data is a warning signal. If June-July arrivals stay in the 100,000-120,000 ton range, earlier stockpiles will face slower turnover. Combined with yuan exchange rate volatility, hedging costs are rising, squeezing trading margins.
By origin, Brazil, the US, and Australia remain the top suppliers. Brazilian cotton continues to dominate due to stable quality and competitive pricing. But as the Northern Hemisphere growing season progresses, market expectations for the 2026/27 crop will start influencing pricing in coming months.
Outlook for H2 2026
Several conclusions can be drawn. First, full-season imports for 2025/26 will likely exceed 1.6 million tons, possibly reaching 1.7 million, meaning imported cotton will play a stronger supplementary role.
Second, June-August is typically a low season for arrivals. Combined with quotas entering their second half, monthly volumes may stay in the 100,000-120,000 ton range. A rebound is expected in September when the new marketing year begins and fresh quotas are issued.
Third, the biggest wildcard is the exchange rate. If the yuan continues to weaken, dollar-denominated imports will become more expensive, pushing mills toward domestic cotton or product mix adjustments.