Slowdown in Foreign Cotton Procurement, Brazil's Dominance Solidified: Analysis of May Cotton Import Data and Industry Impact

In May 2026, China imported 110,000 tons of cotton, down 31.7% month-on-month but up 2.3 times year-on-year. This sharp contrast highlights a transitional phase: the seasonal lull is setting in, yet the low base from last year and lingering quota policies still support total imports.

Import Structure: Brazil Dominates, US Cotton Rebounds

Brazilian cotton held a 58% share, cementing its top position. US cotton saw its share jump 7 percentage points to 22%, driven by concentrated production for US-bound garment orders rather than price competitiveness. Australian cotton share declined due to tight spot supply, reflecting real-world drought impacts. Trade modes show 45% entered via bonded warehouses and 43% via special customs supervision zones, indicating most imports are held as buffer stock rather than entering immediate production. General trade fell to 7%, as mills reduced direct customs clearance purchases.

Price Signals: Rising International Prices Squeeze Margins

Average import price rose to $1,699/ton, up 2.6% month-on-month but down 11.9% year-on-year. Australian cotton averaged $1,948/ton (up 8.3%), US cotton $1,856/ton (up 7.6%), and Brazilian cotton $1,615/ton (up 2.1%). The narrowing cost advantage of foreign cotton is a key reason for the import slowdown, as mills prefer to consume cheaper inventories rather than chase higher prices.

Global Supply-Demand: Australian Crop Cut Becomes Key Variable

USDA's June report shows global ending stocks down over 130,000 tons, with stocks-to-use ratio falling to 64%. Australia's output is estimated at 1 million tons, down 16% year-on-year due to drought, though still 20% above the 10-year average. While absolute supply isn't scarce, high-quality cotton may see premium pricing. Global consumption weakened in Bangladesh, Pakistan, and South Korea, partially offset by gains in China and Vietnam. Exports increased from Brazil, the US, and Kazakhstan. Overall, the market is moving toward a tighter balance, providing price support.

Textile Exports: Garments Surge, Fabrics Soften

May textile and apparel exports totaled $25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. Garment exports reached $13.02 billion (up 14.7% month-on-month), driven by summer order deliveries. Textile exports were $12.59 billion (down 0.9% month-on-month), suggesting overseas fabric restocking has paused. This divergence means upstream demand for yarn and grey fabric is weakening, potentially extending inventory digestion cycles.

Practical Recommendations

For Procurement Managers - Temporarily slow foreign cotton purchases; prioritize bonded warehouse stock and wait for prices to dip below $1,600/ton before restocking. - Monitor Australian cotton arrivals; if supply remains tight, consider substituting with Brazilian or West African cotton. - Exercise caution with US cotton unless backed by confirmed orders, to avoid cost volatility.

For Foreign Trade Companies - The concentrated garment delivery window may extend into late June; monitor whether US and EU replenishment slows afterward. - For fabric exports, negotiate flexible delivery schedules to avoid building finished goods inventory during the lull. - Hedge against RMB exchange rate fluctuations using forward contracts to protect export margins.