The peak-to-decline trajectory of domestic cotton prices in May was essentially a collision between 'expectation-driven' and 'reality-constrained' forces. Early-month supply tightness and concentrated restocking pushed the CCIndex 3128B to a two-and-a-half-year high of 18,211 yuan/ton, but subsequent off-season demand weakness quickly squeezed out the sentiment premium. The monthly average of 17,789 yuan/ton was up 23.1% year-on-year and 3.6% month-on-month, but this price level is already compressing downstream spinners' margins—the average price of 32s pure cotton yarn was 23,277 yuan/ton, up only 3.5% month-on-month, clearly lagging behind cotton's pace.
Industry Supply-Demand: Off-Season Effects Fully Visible
Yarn production data confirms the arrival of the off-season. National yarn output in May was 1.869 million tons, up 2.7% year-on-year but down 1% month-on-month, with Xinjiang output of 319,000 tons down 3.6% month-on-month. Behind the slowdown lies insufficient new orders and rising finished goods inventories. Enterprises adopted cautious restocking, pulling industrial cotton stocks down to 846,000 tons (-3.5% month-on-month, -10.1% year-on-year). Commercial stocks of 3.745 million tons fell 13.3% month-on-month but were still up 8.3% year-on-year, indicating lingering destocking pressure.
Import volume changes also reflect cautious attitudes. May cotton imports were 113,000 tons, plunging 31.7% month-on-month. Despite a 2.3-fold year-on-year increase, the sharp monthly decline reveals weakened off-season purchasing. Import source structure shifted: Brazilian cotton accounted for 57.7%, while U.S. cotton share rose to 22.1%, reflecting trade-off between tariffs and cost-effectiveness. Cumulative imports for January-May reached 825,000 tons (+91% year-on-year), but the monthly drop suggests weakening momentum ahead.
Export Market: European and U.S. Orders Recover, but Sustainability Doubtful
In contrast to weak domestic demand, May textile and apparel exports reached $25.6 billion (+6.5% month-on-month), with exports to the U.S. and EU up 24.7% and 25.6% month-on-month respectively. The phased progress in Sino-U.S. trade talks, coupled with the zero-tariff policy for Africa, indeed drove a wave of order repatriation. However, year-on-year data still showed a 2.3% decline, and January-May cumulative exports barely grew 0.1%, indicating fragile recovery. Cotton garment exports of $2.04 billion were still down 3.7% year-on-year, suggesting cotton end-use recovery lags behind chemical fiber products.
From a global perspective, 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 recent highs. This loose environment means international cotton prices lack sustained upward momentum. The May Cotlook A index averaged 92 cents/lb (+6.5% month-on-month), but later showed weakness due to a strong dollar and weak U.S. export performance. The domestic-international price gap narrowed to 2,270 yuan/ton, down 257 yuan from the previous month, reducing imported cotton's price advantage.
New Crop Growth: Poor Seedling Conditions May Affect New Season Supply Expectations
China Cotton Association surveys show sowing progress reached 99.5% by end-May, essentially complete. However, seedling data warrants attention: only 45.9% of surveyed households rated seedling conditions as better or equal to last year, a 34-percentage-point drop year-on-year. Persistent rainfall in inland cotton areas caused waterlogging, with Yangtze River basin sowing progress 6.9 percentage points behind last year. Nationwide, 85.5% of cotton was in the 4-8 true leaf stage, down 8.9 percentage points year-on-year. If weather does not improve, new season output may fall short of expectations, providing medium-term price support.
At the 2026 China Cotton Development Summit held in Chongqing in late May, 'Transformation and Reconstruction' was the core theme. The concurrent launch of cotton product origin evaluation work signals that the industry is positioning ahead of potential changes in international trade rules. For buyers and exporters, the key variable is not price itself, but the duration of the off-season and the pace of global supply-demand rebalancing.