China's textile market entered its traditional off-season in May 2026, leading to a clear divergence in raw material procurement pace. According to customs data, cotton imports fell to 110,000 tons, a month-on-month decline of 31.7%, but still recorded a 2.3-fold year-on-year increase. This contradictory figure reflects the combined effects of rising international cotton prices, weak downstream orders, and the implementation of policy quotas. For buyers, this is not an optimal window for restocking, but structural opportunities are emerging.
Import Volume-Price Divergence: Dual Pressure from Cost Hikes and Weak Demand
The average import price of cotton in May rose 2.6% month-on-month to $1,699 per ton, with US and Australian cotton seeing the most significant increases of 7.6% and 8.3%, respectively. The earlier surge in international cotton prices directly eroded the cost advantage of foreign cotton. Combined with insufficient new orders during the textile off-season, mills preferred to digest domestic inventories and voluntarily slowed down foreign cotton purchases.
Cumulative imports in the first five months reached 830,000 tons, up 90.7% year-on-year; for the first nine months of the 2025/26 marketing year, cumulative imports were 1.305 million tons, up 45% year-on-year. Despite the monthly decline, the annual cumulative growth remains substantial, indicating that the medium- to long-term import demand base remains intact. The gradual implementation of additional sliding-duty quotas is a key policy factor supporting the year-on-year surge, and this dividend is expected to continue in the second half of the year.
Reshaping of Source Country Landscape: Brazil Dominates, US Rebounds, Australia Under Pressure
The structure of import source countries changed significantly in May. Brazil's share further increased to 58%, solidifying its position as the top source, driven by its price advantage (average price $1,615/ton, $241 lower than US cotton). The US share rose 7 percentage points month-on-month to 22%, mainly driven by concentrated production schedules for apparel export orders to the US, a short-term order-rush effect.
Australia's share declined notably due to insufficient spot supply. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) June report lowered its 2025/26 production estimate to 1 million tons, down 16% year-on-year, mainly due to tight irrigation water resources and below-average rainfall during the growing season in the eastern main producing regions. Although output is still 20% above the ten-year average, supply tightening signals have already been transmitted to prices, with Australian cotton's average price rising 8.3% month-on-month to $1,948/ton, making it the most expensive import source for the month.
End-Use Exports Recover Month-on-Month, but Structural Divergence Warrants Attention
Textile and apparel exports in May totaled $25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. Apparel exports reached $13.02 billion, up 14.7% month-on-month, driven by concentrated shipments of summer apparel orders; textile exports were $12.59 billion, down 0.9% month-on-month, indicating that overseas fabric restocking cycles have largely ended.
This divergence suggests that downstream demand is not a comprehensive recovery but a seasonal, category-specific partial rebound. For cotton textile enterprises, the short-term surge in apparel orders may not be sustainable, while the weakness in the fabric side more accurately reflects overseas buyers' inventory strategies—shifting from restocking to wait-and-see.
Global Supply-Demand Tightening: Ending Stocks-to-Use Ratio Falls to 64%
The USDA June supply-demand report shows that global cotton production for 2025/26 was only slightly raised by 3,300 tons, but exports were raised by over 1%, and ending stocks were cut by over 131,000 tons, bringing the stocks-to-use ratio down to 64%. Although consumption was slightly lowered by 5,400 tons, reductions in major consuming countries like Bangladesh, Pakistan, and South Korea were partially offset by increases in China and Vietnam, indicating overall demand resilience.
Australia's production cut is the biggest variable on the supply side. ABARES lowered the planted area to 6.825 million mu, down 12% year-on-year, with production expected at 1 million tons, down 16% year-on-year. Given Australian cotton's irreplaceable role in high-end yarn markets, its supply contraction will directly push up production costs for combed and high-count yarns.