In May 2026, domestic cotton prices in China experienced a sharp rise and then a rapid decline. The CCIndex 3128B hit a two-and-a-half-year high of 18,211 yuan per ton on May 7, but subsequently fell, with the monthly average settling at 17,789 yuan per ton. This volatility reflects the ongoing tug-of-war between shrinking off-season demand and policy-driven supply support.
Inventory and demand: a mismatch of rising stocks and falling consumption
By the end of May, national commercial cotton inventories stood at 3.745 million tons, down 13.3% month-on-month but still 8.3% higher than the same period last year. While destocking progressed at a reasonable pace, the overall inventory level remained elevated. Meanwhile, industrial cotton inventories fell to 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year. This decline reflects spinners’ reluctance to stock up amid high cotton prices and compressed profit margins.
Yarn production data further confirms demand weakness. May yarn output reached 1.869 million tons, up 2.7% year-on-year but down 1% month-on-month. Xinjiang’s output was 319,000 tons, up 18.6% year-on-year but down 3.6% month-on-month. The average price of 32s pure cotton yarn was 23,277 yuan per ton, up 795 yuan from April, but the increase was far smaller than that of cotton, squeezing mill profits.
Import structure shift: Brazilian cotton dominates
May cotton imports totaled only 113,000 tons, plunging 31.7% month-on-month, though still up 2.3 times year-on-year. Brazilian cotton accounted for 57.7% of imports, while U.S. cotton’s share fell to 22.1%. This shift reflects efforts to diversify sourcing amid trade policy uncertainty and the competitive pricing of Brazilian cotton.
The USDA’s May report raised 2025/26 global cotton production to 26.702 million tons and consumption to 26.156 million tons, with ending stocks rising to 16.823 million tons. Global supply and demand are both at high levels, limiting upward price momentum. The Cotlook A index averaged 92 cents per pound in May, up 6.5% month-on-month, but weakened later due to a strong dollar and poor U.S. export performance. The domestic-international price gap narrowed to 2,270 yuan per ton, 257 yuan less than the previous month.
Policy impact and market expectations
The new round of Xinjiang cotton target price policy was announced in late May, briefly boosting market sentiment and triggering a small price rebound. However, the effect was short-lived as the market quickly refocused on weak off-season demand. The China Cotton Association did not adjust its supply-demand balance for May, signaling caution.
At the 2026 China Cotton Development Summit Forum held in Chongqing, nearly 400 participants discussed reshaping the global cotton landscape. The meeting launched a cotton product origin evaluation initiative, aimed at improving traceability and brand value for Chinese cotton goods. While positive for long-term export competitiveness, this will not immediately offset the current order shortfall.
Export recovery: structural opportunities
May textile and apparel exports reached $25.6 billion, up 6.5% month-on-month but down 2.3% year-on-year. Cumulative exports for January-May were $116.73 billion, up 0.1% year-on-year. Exports to the U.S. and EU grew 24.7% and 25.6% month-on-month, respectively, far outpacing the 9.7% growth to Belt and Road countries. This surge was driven by short-term restocking rather than a fundamental recovery in consumer demand.
Cotton garment exports totaled $2.04 billion, up 11.9% month-on-month but still down 3.7% year-on-year.
New crop planting: early signs of concern
By end-May, national cotton planting progress reached 99.5%, roughly on par with last year. However, persistent rainfall in inland regions slowed planting in the Yellow River basin (down 1.4 percentage points) and the Yangtze River basin (down 6.9 percentage points). Only 45.9% of surveyed farmers rated seedling conditions as better or equal to last year, a drop of 34 percentage points. Poor seedling development suggests potential downward pressure on new crop yields, which could support prices later in the season.