In May, domestic cotton prices experienced a roller-coaster ride. At the beginning of the month, driven by tight new-crop supply expectations and concentrated mill restocking, the CCIndex 3128B surged to 18,211 yuan per ton on May 7, a two-and-a-half-year high. Subsequently, weakening off-season demand and a decline in international prices exerted dual pressure, causing prices to gradually give back gains. Although a modest rebound occurred at month-end following the implementation of the Xinjiang cotton target price policy, the monthly average of 17,789 yuan per ton still rose 3.6% from April and 23.1% year-on-year.
This price movement reflects the full emergence of the textile industry's off-season effects. Yarn production in May reached 1.869 million tons, up 2.7% year-on-year but down 1% month-on-month. Xinjiang's output grew 18.6% year-on-year but also fell 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 notably weaker than that of cotton, further squeezing mill profitability.
Imports and Inventories: Cooling Restocking Appetite
Faced with shrinking off-season demand, textile mills significantly reduced their foreign cotton purchases. May cotton imports were only 113,000 tons, plunging 31.7% month-on-month, though still up 2.3 times year-on-year. Brazilian cotton continued to dominate, accounting for 57.7%, while U.S. cotton's share rose to 22.1%. Cumulative imports from January to May reached 825,000 tons, up 91% year-on-year, reflecting still-high total imports in the first half.
Inventory data confirms the cautious mill sentiment. As of end-May, national commercial cotton inventories stood at 3.745 million tons, down 13.3% month-on-month but still 8.3% higher year-on-year. Industrial inventories were 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year. This indicates that despite commercial inventory drawdown, downstream mills are not actively restocking, relying instead on hand-to-mouth purchases. Rising finished goods inventories further suppress raw material demand.
Structural Divergence in Export Recovery
Progress in U.S.-China trade consultations, coupled with the implementation of zero-tariff policies for African countries, boosted May textile and apparel exports to $25.6 billion, up 6.5% month-on-month but down 2.3% year-on-year. Cotton garment exports reached $2.04 billion, up 11.9% month-on-month but down 3.7% year-on-year. Notably, exports to the U.S. and EU grew over 24% month-on-month, providing short-term support, while exports to Belt and Road countries rose only 9.7% month-on-month, indicating moderate growth in emerging markets.
The export recovery reflects order回流 and seasonal replenishment rather than a fundamental demand turnaround. Cumulative exports from January to May reached $116.73 billion, up just 0.1% year-on-year, suggesting ongoing pressure for full-year exports.
International Market: Loose Supply-Demand Balance
The USDA's May report raised 2025/26 global cotton production to 26.702 million tons, consumption to 26.156 million tons, and ending stocks to 16.823 million tons, all at multi-year highs. International prices were pressured by a strong dollar and weak U.S. cotton export performance. The Cotlook A Index averaged 92 cents per pound, equivalent to 15,518 yuan per ton after 1% tariff, a discount of 2,270 yuan to domestic prices, narrowing the spread by 257 yuan from April.
The contrast between loose international supply and tight domestic conditions is clear, but weak off-season demand prevents domestic prices from sustaining high levels. If global production materializes in the second half, international prices may face further pressure, and the domestic-international spread could continue to fluctuate.
New Crop Sowing: Seedling Conditions Weaker Than Last Year
National cotton sowing progress reached 99.5%, essentially complete, but continuous rainfall in inland cotton regions caused waterlogging, leading to overall weaker seedling conditions compared to last year. As of end-May, 85.5% of cotton was at the 4-8 true leaf stage, down 8.9 percentage points year-on-year. Only 45.9% of surveyed farmers rated seedling conditions as better or equal to last year, a sharp drop of 34 percentage points. Xinjiang cotton fields have entered the squaring stage, but localized heavy rainfall has disrupted growth.
Weaker seedling conditions could affect new-crop yields. If weather risks materialize later, new-crop supply expectations may face adjustments.
Industry Consensus: Reshaping the Global Cotton Landscape
On May 28-29, the China Cotton Association hosted the 2026 China Cotton Industry Development Summit Forum in Chongqing, with nearly 400 participants. The forum focused on 'Change and Reconstruction: Shaping a New Global Cotton Landscape.' During the event, the launch of a cotton product origin evaluation initiative aims to enhance traceability and brand value of domestic cotton. This reflects the industry's shift from pure price competition toward building a quality and trust system.