China's cotton imports in May 2026 showed a notable price-volume divergence: volumes plunged 31.7% month-on-month but surged 2.3 times year-on-year, while average import prices rose 2.6% MoM to $1,699/ton. This combination reflects the dual squeeze of off-season demand weakness and elevated international cotton prices, and reveals deepening rhythm divergence across the supply chain.
Import Structure Reshuffled: Brazil Dominates, U.S. Cotton Rebounds on Order Rush
Brazilian cotton maintained its leading position with a 58% share in May, up from the previous month. U.S. cotton saw its share jump 7 percentage points to 22%, driven by concentrated production scheduling for apparel export orders to the U.S. — a trend mirrored by a 14.7% MoM increase in apparel exports in the same month.
Australian cotton's share declined due to tight spot supply. The June report from ABARES indicated that 2025/26 Australian cotton output is estimated at 1 million tons, down 16% year-on-year, with planted area falling 12% due to irrigation water shortages and below-average rainfall in eastern growing regions. Although output remains 20% above the 10-year average, short-term supply gaps have already transmitted to the Chinese market.
In terms of trade modes, bonded warehouse entries maintained a 45% share, while logistics goods in special customs supervision zones rose to 43%. General trade imports plunged 8 percentage points to 7%, reflecting a preference for flexible inventory management via bonded channels amid high prices.
Price Transmission and Downstream Response: Cost Advantage Narrows, Restocking Slows
Average import prices rose 2.6% MoM in May, with U.S. and Australian cotton posting the sharpest increases at 7.6% and 8.3% respectively, reaching $1,856/ton and $1,948/ton. Brazilian cotton saw a more moderate 2.1% MoM increase to $1,615/ton, maintaining its cost advantage.
The earlier surge in international cotton prices directly eroded the cost competitiveness of foreign cotton. Combined with the onset of the traditional off-season for domestic textile markets and insufficient new orders, mills relied more on domestic inventories and deliberately slowed foreign cotton procurement. May's 31.7% MoM drop in imports to 110,000 tons is a direct reflection of this logic.
This "high price + weak demand" combination pressures cash flow for small and medium-sized spinners — rising raw material costs cannot be easily passed through to product prices, further compressing profit margins. For yarn mills dependent on imported cotton, Brazilian cotton's price resilience makes it a short-term safe haven, but weather risks in Brazilian production areas need monitoring.
Downstream Export Divergence: Apparel Rush Active, Fabric Cooling
May's textile and apparel exports totaled $25.61 billion, up 6.5% MoM but down 2.3% YoY. Apparel exports hit $13.02 billion, up 14.7% MoM, while textile exports (mainly fabrics) reached $12.59 billion, down 0.9% MoM and 0.3% YoY.
This divergence confirms a supply chain rhythm mismatch: overseas summer apparel orders were concentrated in May, boosting apparel shipments, but overseas fabric restocking has largely concluded, leading to weaker textile exports. Cumulative exports for January-May stood at $116.74 billion, roughly flat year-on-year, indicating insufficient growth momentum for full-year exports and potentially greater pressure in the second half.
Global Supply-Demand Adjustments: Output Edges Up, Consumption Down, Inventories Shrink
The USDA's June 2025/26 global cotton supply-demand report showed a slight 33,000-ton increase in production, a 54,000-ton decline in consumption, an export increase of over 1%, and a sharp 131,000-ton drop in ending stocks, pushing the stocks-to-use ratio down to 64%.
Production gains came mainly from Egypt, partially offset by declines in Argentina. On the consumption side, reductions in Bangladesh, Pakistan, and South Korea outweighed increases in China and Vietnam. Export increases were driven by Brazil, the U.S., Kazakhstan, and Turkey.
The notable decline in ending stocks suggests the global cotton market is shifting from a loose to a tighter balance. If major producers (especially Brazil and the U.S.) experience weather disruptions in 2026/27, international prices could rise further. For Chinese textile mills, this implies a potentially higher long-term raw material cost floor.