May's cotton import data sends a clear signal: domestic textile mills are slowing raw material replenishment, but the external supply center is shifting faster than expected.
Behind the Month-on-Month Import Decline
According to China Customs, May 2026 cotton imports totaled 110,000 tons, down 31.7% month-on-month but surging 2.3 times year-on-year. The first five months saw cumulative imports of 830,000 tons, up 90.7%. The monthly decline is not a demand collapse but the result of two forces.
International cotton prices rose sharply, eroding the cost advantage of foreign cotton. The average import price reached $1,699/ton in May, up 2.6% month-on-month. US cotton hit $1,856/ton (up 7.6%), while Australian cotton reached $1,948/ton (up 8.3%). Cost pressure directly impacted mills' purchasing decisions.
More fundamentally, the downstream textile sector entered its traditional low season. With insufficient new orders, mills preferred to use domestic inventories rather than buy expensive imports. This suggests the import contraction is seasonal and price-driven, not a long-term trend.
Brazilian Cotton Dominates, US Cotton Rebounds on Order Rush
Shifts in import sources deserve attention. Brazilian cotton maintained its top position with a 58% share in May, nearly dominating the market. Its stable supply and lower price—$1,615/ton, $241 less than US cotton—make it the preferred choice for Chinese mills.
US cotton's share rose 7 percentage points to 22%, driven by concentrated production of apparel orders for the US market. This is a short-term effect. Whether US cotton can sustain this share depends on bilateral trade relations and price competitiveness.
Australian cotton's share fell due to tight现货 supply. ABARES reported in June that 2025/26 Australian cotton output is estimated at 1 million tons, down 16% year-on-year. Irrigation water shortages and low rainfall in eastern growing regions reduced planted area by 12%. Although output is still 20% above the 10-year average, the temporary shortage has already impacted trade flows.
Global Supply-Demand Adjustment: Inventory Drawdown and Regional Production Cuts
The USDA June global supply-demand report for 2025/26 shows a slight increase in production (by 3,300 tons) and a slight decrease in consumption (by 5,400 tons). Exports rose over 1%, while ending stocks fell by more than 131,000 tons, dropping the stocks-to-use ratio to 64%.
On the production side, Egypt's increase partly offset Argentina's decline. On the consumption side, reductions in Bangladesh, Pakistan, and South Korea were not fully offset by gains in China and Vietnam. Export growth came mainly from Brazil, the US, Kazakhstan, and Turkey, indicating trade is concentrating in more cost-competitive regions.
Australian cotton's 16% output drop is the most notable supply-side variable this year. Although 1 million tons is above the historical average, the sharp decline will disrupt short-term supply. Mills relying on high-grade Australian fiber need to lock in alternative sources early.
Textile and Apparel Exports: Apparel Strengthens, Fabrics Weaken
May textile and apparel exports totaled $25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. The structure showed clear divergence: apparel exports reached $13.02 billion (up 14.7% month-on-month), driven by concentrated shipments of summer orders; textile exports were $12.59 billion (down 0.9% month-on-month), as overseas fabric restocking largely concluded.
Cumulative exports for the first five months were $116.74 billion, roughly flat year-on-year. This indicates that overseas end-demand has not expanded significantly; orders are more seasonally concentrated. For upstream cotton mills, this means raw material procurement should be precisely matched to order cycles rather than simply following import data fluctuations.