China's cotton imports in May 2026 tell a story of two forces: a sharp 31.7% month-on-month drop to 110,000 tons, yet a 2.3-fold year-on-year surge. This paradox reflects both the traditional off-season slowdown and the statistical illusion of a low base last year. More importantly, the shifting import source structure and rising international prices are reshaping procurement strategies across the textile chain.
Import Structure: Brazil Dominates, US Cotton Rebounds on Order Rush
Brazilian cotton solidified its top position with a 58% share, up from the previous month. US cotton saw the most dramatic structural shift, rising 7 percentage points to 22%. The reason is twofold: Australian cotton supply tightened due to drought in eastern growing regions, while rush orders for US-bound apparel concentrated demand. Kazakhstan and Afghanistan lost ground, with shares falling to 5% and 4%, respectively.
For buyers, Brazil's dominance signals that its price advantage and supply stability remain unmatched. The US cotton rebound is likely temporary, driven by a specific order cycle. Once that cycle ends, the high price of US cotton may again deter purchases.
Price Transmission: Rising International Prices Squeeze Cost Advantage
The average import price rose 2.6% month-on-month to $1,699/ton, with US and Australian cotton leading the gains at 7.6% and 8.3% increases, respectively. Brazilian cotton, at $1,615/ton, rose only 2.1%, widening its cost advantage. This divergence directly influenced mill behavior: with weak new orders, factories preferred to draw down domestic inventories rather than buy expensive foreign cotton.
Customs data confirms this: bonded warehouse transactions remained the top trade mode at 45%, while general trade share plunged 8 percentage points to 7%, indicating reduced active import appetite. The year-on-year surge is largely a base effect from last year's low volume, combined with earlier quota arrivals still being digested.
Global Supply-Demand: Australian Crop Cut and Inventory Drawdown
The USDA June report shows global ending stocks down by over 131,000 tons, with the stocks-to-use ratio falling to 64%. ABARES cut Australia's 2025/26 production estimate to 1 million tons, down 16% year-on-year, due to irrigation water shortages and below-average rainfall in eastern regions. Though output remains 20% above the 10-year average, the cut signals tighter high-grade cotton supply.
The direct consequence: premium for Australian and US cotton may widen further, pressuring mills that rely on fine-count yarn. Brazilian cotton's ample supply and low price are filling the gap, creating a tiered market where Brazil competes on cost while US and Australia compete on quality.
Downstream Signals: Export Structure Diverges, Affecting Raw Material Demand
China's textile and apparel exports reached $25.61 billion in May, up 6.5% month-on-month but down 2.3% year-on-year. Apparel exports surged 14.7% month-on-month, while textile exports edged down 0.9%, indicating that overseas summer apparel orders were shipped but fabric restocking had ended. This 'apparel strong, textiles weak' pattern directly slowed cotton procurement.
Cumulative exports from January to May totaled $116.74 billion, roughly flat year-on-year, suggesting no fundamental recovery in external demand. This means second-half cotton buying will hinge on domestic consumption recovery and price movements.