In May 2026, China's cotton imports plunged 31.7% month-on-month but still recorded a 2.3-fold year-on-year increase. This contrasting data reflects the combined forces of the textile off-season and global production cuts. The average import price rose to $1,699 per ton, up 2.6% month-on-month, signaling a volume-price divergence that warrants attention across the supply chain.
Import Structure Shifts: Brazil Dominates, US Cotton Rebounds on Rush Orders
By origin, Brazilian cotton's share rose to 58%, solidifying its position as China's top import source. This is attributed to its persistent price competitiveness—an average price of only $1,615/ton, far lower than Australian cotton's $1,948/ton and US cotton's $1,856/ton—and textile mills' relentless pursuit of cost efficiency.
US cotton's share increased by 7 percentage points to 22%, driven by rush orders for apparel exports to the US. In May, textile and apparel exports grew 6.5% month-on-month, with apparel exports surging 14.7%, confirming the concentrated shipment of summer orders. However, US cotton's average price rose 7.6% month-on-month, putting cost pressure on the garment segment.
Australian cotton's share declined due to tight spot supply. ABARES' June report estimated Australia's 2025/26 cotton output at 1 million tons, down 16% year-on-year. Irrigation water shortages and below-average rainfall in eastern growing regions caused a 12% drop in planted area. Although output remains 20% above the decade average, the short-term supply gap has reshaped import patterns.
Off-Season Effects and Cost Game: Mills' Restocking Logic Changes
The month-on-month drop in May imports directly results from earlier international cotton price hikes eroding foreign cotton's cost advantage. While average import prices fell 11.9% year-on-year, they rose 2.6% month-on-month. For small and medium-sized mills with thin margins, even a few dozen dollars per ton can shift procurement decisions.
More critically, downstream demand weakened. Textile exports fell 0.3% year-on-year and 0.9% month-on-month, as overseas fabric stockpiling largely concluded. Mills relied on domestic inventories and actively slowed foreign cotton purchases. The share of bonded warehouse transactions remained highest at 45%, but general trade plummeted 8 percentage points to 7%, indicating a preference for flexible bonded operations over direct purchases.
This cautious stance is also reflected in trade mode shifts. The share of goods under customs special supervision zones rose 6 percentage points to 43%, suggesting more imported cotton is held in bonded zones like migratory birds, awaiting clear customs only after downstream orders are confirmed. This hedges against price volatility and off-season uncertainty.
Global Supply-Demand Tilt: Production Cuts and Weak Consumption Coexist
USDA's June global cotton supply-demand report for 2025/26 shows a slight 3,300-ton increase in production, a 5,400-ton decrease in consumption, a 1%+ rise in exports, and a sharp 131,000-ton drop in ending stocks, with the stocks-to-use ratio falling to 64%.
The modest production increase came mainly from Egypt, partly offset by a reduction in Argentina. Consumption cuts concentrated in Bangladesh, Pakistan, and South Korea—key destinations for global textile capacity relocation—suggest uneven terminal demand recovery.
Australia's production cut is more structural. ABARES data shows output at 1 million tons, down 16% year-on-year, with planted area down 12%. Australian cotton is known for high quality and stable supply; this reduction will directly impact Chinese high-end yarn mills' raw material choices, potentially shifting demand toward US or Brazilian cotton.