May's cotton import data presents a contradictory signal: a 2.3-fold year-on-year surge yet a 31.7% month-on-month plunge. This 'ice and fire' scenario reflects a collective resonance across the supply chain, from upstream price games to downstream order rhythms.
For textile mills, this inflection point signals a narrowing procurement window, while shifts in global origin structures are rewriting traditional sourcing priorities.
Import Structure: Brazilian Cotton Dominates, US Cotton Rebounds on Rush Orders
In May, China imported 110,000 tons of cotton. Brazilian cotton's share rose to 58%, maintaining its top supplier position, driven by its price advantage ($1,615/ton, $241 lower than US cotton).
US cotton's share increased by 7 percentage points month-on-month to 22%, due to concentrated production scheduling for US garment orders. This 'order-driven' procurement is temporary; once the rush ends, US cotton's share may retreat.
Australian cotton's share declined due to tight spot supply, not weak demand. The ongoing drought in Australia has led to a 16% cut in production estimates, making tight supply a new normal.
Price Transmission: Higher International Prices Weaken Cost Advantage
The average import price rose 2.6% month-on-month to $1,699/ton. US cotton saw the largest increase (+7.6%), followed by Australian (+8.3%), while Brazilian cotton had the smallest gain (+2.1%).
Implications:
- Brazilian cotton's cost advantage becomes even more pronounced, acting as a 'ballast stone' for import volumes.
- Rapid US cotton price increases narrow the gap with domestic prices, reducing its appeal.
- High Australian cotton prices ($1,948/ton), combined with tight supply, suggest its import share may continue to decline.
For mills, procurement decisions have shifted from 'price first' to 'availability first.' Brazilian cotton, with stable supply and moderate prices, has become the safe-haven choice.
Downstream Transmission: Off-Season Effect and Inventory Digestion Slow Buying
May marks the traditional off-season for textiles, with insufficient new orders. Although textile and apparel exports rose 6.5% month-on-month, this was driven by apparel (+14.7% month-on-month), while fabric exports fell 0.9% month-on-month.
This indicates that downstream weaving is slowing raw material consumption. Mills are relying on domestic inventory and actively slowing foreign cotton purchases. This 'de-stocking' behavior is rational—when order uncertainty and cotton price volatility are high, keeping low inventory reduces capital occupation and price risk.
Global Supply-Demand: Australian Production Cut and Inventory Drawdown Tighten Medium-Term Supply
The USDA June report shows global ending stocks for 2025/26 down by over 131,000 tons, with the stocks-to-use ratio falling to 64%. ABARES cut Australia's cotton production estimate to 1 million tons, down 16% year-on-year.
As a major supplier of high-grade cotton, Australia's production cut will push up global premiums for premium cotton. Meanwhile, global exports are revised up by over 1%, with increases from Brazil and the US, indicating a shift toward lower-cost producing regions.
In the medium to long term, cotton prices have a floor, but structural divergence will intensify: low-grade cotton will remain abundant, while premiums for high-grade cotton (Australian, some US) may continue to strengthen.