In May 2026, China's cotton imports showed a clear divergence: a sharp 31.7% month-on-month decline but a 2.3-fold year-on-year increase. This contrast reflects the dual pressure from rising international cotton prices and the domestic textile off-season. Although the 110,000-ton import volume was lower than the previous month, the cumulative 830,000 tons in the first five months still surged 90.7% year-on-year, indicating that the overall replenishment pace has not fundamentally reversed, only temporarily slowed.
Import Source Restructuring: Brazilian Cotton Dominates, US Cotton Rebounds
Brazilian cotton continued to solidify its position as the top import source, with its share rising to 58% in May. This concentration reflects Chinese buyers' reliance on Brazilian cotton for cost-effectiveness and supply stability. Meanwhile, US cotton's share jumped from 15% to 22%, a 7-percentage-point increase month-on-month, primarily driven by the rush to fulfill US garment export orders—downstream mills had to purchase corresponding origin cotton to meet delivery deadlines.
Australian cotton's share declined due to insufficient spot supply. An ABARES June report showed that the 2025/26 Australian cotton crop is estimated at only 1 million tons, down 16% year-on-year, with planted area also falling 12%. Although irrigation support keeps production 20% above the ten-year average, short-term supply tightness has already affected trade flows.
Price Transmission: Rising International Prices Weaken Competitiveness
The average import price of cotton in May rose to $1,699 per ton, up 2.6% month-on-month. US cotton saw the largest increase, rising 7.6% to $1,856 per ton; Australian cotton averaged $1,948 per ton, up 8.3%. Brazilian cotton, though cheaper at $1,615 per ton, also rose 2.1%. Higher prices directly eroded the cost advantage of imported cotton relative to domestic cotton, becoming a key factor in slowing procurement.
In terms of trade modes, bonded warehouse entries remained the largest at 45%, while special customs supervision zone logistics accounted for 43%, up 6 percentage points. General trade fell to 7%, suggesting that imported cotton is more held as 'transit inventory' rather than directly entering processing, reflecting mills' wait-and-see attitude toward future price trends.
Downstream Transmission: Off-Season and Order Structure Changes
Textile and apparel exports in May reached $25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. Garment exports rose 14.7% month-on-month, driven by concentrated shipments of summer orders, while textile exports fell 0.9%, indicating that fabric restocking demand has become saturated. This 'strong garments, weak fabrics' pattern has removed sustained momentum for upstream cotton procurement.
Cumulative exports for January-May totaled $116.74 billion, roughly flat year-on-year, suggesting no significant deterioration in external demand but weakening growth momentum. Mills increasingly rely on domestic inventory digestion and actively reduce imported cotton purchases to avoid building stocks at high prices.
Global Supply-Demand Adjustment: Inventory Down, Australian Crop Decline Raises Concerns
The USDA June global cotton supply-demand report showed minimal production growth of 3,300 tons, a consumption decline of 5,400 tons, exports up over 1%, and ending stocks down significantly by 131,000 tons, with the stocks-to-use ratio falling to 64%. These data signal a tightening supply picture, with Brazil, the US, and Kazakhstan as main sources of export growth.
Australian cotton's production decline is a key variable. ABARES cited irrigation water shortages and below-average rainfall in eastern growing regions, leading to lower planted area and yields. Although production remains above the ten-year average, the 16% decline is enough to affect short-term trade flows, pushing some demand toward US and Brazilian cotton.
For domestic textile enterprises, three variables require close attention: whether international cotton prices can sustain highs, the continuity of garment export orders, and domestic production expectations for the new season. If the off-season extends into Q3, imports may continue to face pressure; conversely, if autumn-winter orders start early, imports could pick up again in H2.