Monthly fluctuations in cotton imports often serve as an early indicator of shifts in downstream textile demand. China's May 2026 customs data reveals a critical turning point: imports fell 31.7% month-on-month to 110,000 tons, yet still surged 2.3 times year-on-year. This apparent contradiction reflects the dual pressure of the off-season effect and rising international cotton prices, signaling that mills are shifting from active stockpiling to cautious观望.
Import Structure Shift: Brazil Dominates, US Cotton Rebounds on Rush Orders
In May, the import source structure changed markedly. Brazilian cotton, with stable supply and relatively lower prices, increased its share to 58%, cementing its top position. US cotton's share rebounded 7 percentage points month-on-month to 22%, driven by concentrated rush orders for apparel exports to the US—some exporters accelerated production to hedge against potential tariff risks, locking in US cotton as raw material. In contrast, Australian cotton saw its share decline sharply due to insufficient spot supply from drought-affected eastern growing regions; shares from Kazakhstan and Afghanistan also narrowed.
By trade mode, goods entering bonded supervision sites remained the largest category at 45%, up 2 percentage points. Goods under customs special supervision zones rose 6 points to 43%, while general trade fell 8 points to 7%. This structural shift indicates that enterprises prefer using bonded channels to flexibly manage inventory rather than bulk purchasing through general trade, further confirming market caution.
Price Transmission: Cost Advantage Erodes, Mills Turn to Domestic Stocks
The average import price is the core variable affecting purchasing decisions. In May, the average import price rose to $1,699 per ton, up 2.6% month-on-month, and despite a year-on-year decline of 11.9%, the consecutive two-month increase has significantly eroded the cost advantage of foreign cotton over domestic cotton. Specifically, Brazilian cotton averaged $1,615/ton (up 2.1% month-on-month), US cotton $1,856/ton (up 7.6%), and Australian cotton $1,948/ton (up 8.3%).
Rising prices, combined with the traditional off-season, have led to insufficient new orders and lower operating rates at textile mills. Most factories are relying on previously accumulated domestic stocks and have actively slowed foreign cotton purchases. This 'price-for-volume' game essentially reflects a blockage in profit transmission from upstream raw materials to downstream fabric and apparel segments. For buyers, the risk of chasing high prices for replenishment currently outweighs the rewards.
Downstream Exports: Apparel Orders Lift, Fabric Restocking Nearly Complete
May textile and apparel exports totaled $25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. The structural divergence is noteworthy: apparel exports reached $13.02 billion, surging 14.7% month-on-month, driven by concentrated shipments of summer orders; textile (mainly fabric) exports were $12.59 billion, down 0.9% month-on-month, indicating that overseas fabric restocking has largely concluded.
This divergence means current export resilience relies mainly on seasonal replenishment from the apparel segment, not sustained fabric demand. Once these orders are fulfilled, support for further raw material procurement may weaken. Cumulative exports from January to May totaled $116.74 billion, roughly flat year-on-year, reflecting a lack of strong growth momentum for the full year.
Global Supply Tightens: Australia Cuts Output 16%, Stocks Revised Down
Supply-side changes in the international market are providing a floor for future cotton prices. The USDA's June supply-demand report shows 2025/26 global ending stocks revised down by over 131,000 tons, with the stocks-to-use ratio falling to 64%. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) sharply cut its Australian cotton production estimate to 1 million tons, down 16% year-on-year, with planted area also down 12%. Although irrigated production still keeps output 20% above the 10-year average, water scarcity and below-average rainfall in eastern regions have materially threatened yields.
Shrinking global stocks and Australian production cuts suggest international cotton prices are likely to remain firm or rise. For Chinese textile mills, the current window of price adjustment may be fleeting. Balancing inventory risk during the off-season while securing raw materials for the peak season will be the key challenge for procurement decisions.