In May 2026, the average domestic cotton spot price rose 23.1% year-on-year and 3.6% month-on-month, but the monthly trend was a clear peak-and-retreat. On May 7, the CCIndex 3128B hit 18,211 yuan per ton, a two-and-a-half-year high, before gradually falling back under the weight of weak off-season demand. This price swing reflects the diverging expectations and ongoing rebalancing across the textile supply chain.
Off-Season Effects Accelerate
The impact of the traditional textile off-season was evident in May data. National Bureau of Statistics data shows national yarn output of 1.869 million tons, up only 2.7% year-on-year and down 1% month-on-month. Xinjiang, a key production base, produced 319,000 tons of yarn, up 18.6% year-on-year but down 3.6% month-on-month. Enterprise profit margins tightened as 32-count combed cotton yarn averaged 23,277 yuan per ton, up 795 yuan from the previous month, but the increase lagged behind cotton prices.
This "strong cotton, weak yarn" dynamic means downstream weaving and garment firms are actively controlling raw material costs. Mill operating rates fell, and restocking turned cautious, with procurement limited to essential needs. By end-May, cotton industrial inventories stood at 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year, indicating factories' declining tolerance for high cotton prices.
Import Slump and Inventory Shifts
The sharp month-on-month decline in cotton imports further confirms weak demand. Customs data shows May cotton imports of only 113,000 tons, down 31.7% month-on-month. Although up 2.3 times year-on-year, this is largely due to a low base last year. Among import sources, Brazilian cotton accounted for 57.7%, while US cotton rose to 22.1%, as geopolitical factors reshape China's cotton import structure.
Commercial inventories reached 3.745 million tons at end-May, down 13.3% month-on-month but still up 8.3% year-on-year. This "down month-on-month, up year-on-year" pattern suggests slower-than-usual inventory digestion. The USDA's May report revised 2025/26 global cotton production up to 26.702 million tons, consumption to 26.156 million tons, and ending stocks to 16.823 million tons, confirming a loose global supply-demand balance.
Policy and Trade Provide Short-Term Anchors
Two key variables provided temporary support this month. First, the new Xinjiang cotton target price policy boosted producer confidence, leading to a modest price rebound in late May. Second, progress in China-US trade talks, combined with China's zero-tariff policy for African nations, drove structural export recovery. Customs data shows May textile and apparel exports of $25.6 billion, up 6.5% month-on-month, with exports to the US and EU rising 24.7% and 25.6%, respectively.
However, the sustainability of this export recovery remains uncertain. January-May cumulative exports of $116.73 billion were up just 0.1% year-on-year, while cotton garment exports of $2.04 billion fell 3.7%. The high month-on-month growth in US and EU markets partly reflects pent-up order releases rather than fundamental demand improvement.
Weather Risks in Growing Regions
Supply-side risks center on weather conditions. By end-May, national cotton planting progress reached 99.5%, with Xinjiang fully planted, but the Yellow River and Yangtze River regions lagged by 1.4 and 6.9 percentage points, respectively. Persistent rainfall in inland cotton areas caused waterlogging, slowing seedling growth. Only 85.5% of cotton was at the 4-8 true leaf stage, down 8.9 percentage points year-on-year. Just 45.9% of surveyed farmers rated seedling conditions as better than or equal to last year, down 34 percentage points.
If weather conditions remain unfavorable, new-crop yields and quality could suffer, disrupting 2026/27 supply expectations. While global inventories are high, China's output fluctuations as the largest consumer still significantly impact international cotton prices.
Industry Consensus and Future Direction
The China Cotton Association's 2026 China Cotton Industry Development Summit Forum, held in Chongqing on May 28-29, drew nearly 400 domestic and international attendees. The forum's theme, "Change and Reconstruction: Shaping a New Global Cotton Landscape," aptly captures the industry's current crossroads, with competing forces of weak off-season demand, policy support, and trade complexity intensifying supply chain dynamics.