China's cotton import data for May 2026 presents a clear yet contradictory signal: a year-on-year surge of 2.3 times but a sharp month-on-month decline of 31.7%. This contrast tells the market that the pace of overseas cotton procurement is undergoing a structural shift, driven by a combination of seasonal demand contraction and cost considerations.
The Dual Logic Behind the Import Decline
In absolute terms, May saw 110,000 tonnes of cotton imports, bringing the cumulative total for the first five months to 830,000 tonnes, up 90.7% year-on-year. However, the more telling figure is the month-on-month drop of nearly one-third, which reflects a transition from 'stockpiling' to 'wait-and-see' among buyers.
Two factors are at play. First, international cotton prices rose in April and May, pushing the average import price to USD 1,699 per tonne, up 2.6% month-on-month, eroding the cost advantage of foreign cotton. Second, the downstream textile sector has entered its traditional off-season, with insufficient new orders prompting mills to rely on domestic inventories rather than restocking at higher prices.
Brazilian Cotton Dominates, US Cotton Rebounds with a Twist
The import source structure reveals another key signal. Brazilian cotton's share rose further to 58%, cementing its position as the top supplier. This is not only due to its lower price—averaging USD 1,615 per tonne, USD 241 less than US cotton and USD 333 less than Australian cotton—but also its stable supply, which supports large-scale continuous procurement by Chinese mills.
US cotton saw its share jump by 7 percentage points to 22%, the most significant change in May. This rebound was not driven by price attractiveness—its average price of USD 1,856 per tonne was up 7.6% month-on-month—but rather by the rush to fulfill export orders for apparel bound for the US market. This reflects the short-term 'front-loading' effect amid trade tensions, though its sustainability remains questionable.
Australian cotton's share declined due to tight spot supply. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) downgraded its 2025/26 production estimate to 1 million tonnes, down 16% year-on-year, with planting area shrinking 12%. Although output remains 20% above the 10-year average, the short-term supply gap has already impacted trade flows.
Global Supply-Demand Adjustments: Inventory Drawdown and Regional Divergence
The USDA's June supply-demand report paints a picture of slightly higher production, marginally lower consumption, a more than 1% increase in exports, and a significant inventory drawdown. Ending stocks fell by over 131,000 tonnes, pushing the stocks-to-use ratio down to 64%.
Consumption cuts were concentrated in Bangladesh, Pakistan, and South Korea, while increases in China and Vietnam failed to fully offset the decline. This divergence indicates that while the center of textile manufacturing continues to shift toward Asia, demand weakness in some countries is starting to drag down the overall consumption outlook.
Export growth came from Brazil, the US, Kazakhstan, and Turkey, closely mirroring changes in import source structures. Brazil's global supply capacity is strengthening, while US export share has recovered temporarily under short-term order pressure.
Downstream Transmission: Apparel Exports Rise, Fabric Demand Cools
In May, textile and apparel exports totaled USD 25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. The divergence lies in the different trends for apparel and textiles: apparel exports rose 14.7% month-on-month, while textile exports fell 0.9%.
The apparel increase was driven by concentrated shipments of summer orders, which explains the rebound in US cotton imports—some orders were destined for the US market, rushed to completion before potential tariff adjustments. The weakness in textile exports signals that the overseas fabric restocking cycle has largely ended, cooling demand for upstream yarn and grey fabric.
For cotton buyers, this transmission chain means that short-term apparel orders may continue to support some foreign cotton demand, but the weakness in textiles will gradually feed upstream, likely keeping June and July import volumes under pressure.
Price Outlook: The Tug-of-War Between Cost Push and Demand Suppression
The average import price rose 2.6% month-on-month but was still down 11.9% year-on-year. This spread indicates that international cotton prices remain in a relatively low range, but upward pressure is building.
By variety, Australian cotton saw the largest price increase at 8.3% month-on-month, directly linked to supply shortages. US cotton rose 7.6%, while Brazilian cotton increased more modestly at 2.1%. For Chinese textile mills, Brazilian cotton's cost advantage is unlikely to be challenged in the near term, suggesting its import share will likely remain above 50%.
However, ongoing drought in major overseas cotton-producing regions remains a risk. If weather conditions in US and Australian growing areas worsen further, international cotton prices could enter an upward trajectory. Whether downstream off-season demand suppression can offset this cost push will be the key variable determining Q3 import patterns.