China's cotton imports in May plunged 31.7% month-on-month but still surged 2.3 times year-on-year, reflecting the interplay of off-season demand weakness and lingering policy effects. For buyers, the cost advantage of imported cotton is narrowing, while global supply adjustments—especially Australia's sharp output cut—are reshaping trade flows.
Imports Drop Sharply: Off-Season and Price Pressure
Customs data show May imports at 110,000 tonnes, down 31.7% from April but up 2.3 times year-on-year. Cumulative imports for January-May reached 830,000 tonnes (+90.7% YoY), and for the first nine months of 2025/26 season, 1.305 million tonnes (+45% YoY).
The month-on-month decline stems from two factors: rising international cotton prices—average import price rose 2.6% to $1,699/tonne—which eroded cost competitiveness relative to Xinjiang cotton, and the onset of the traditional off-season, with mills relying on domestic inventories amid insufficient new orders. This suggests the concentrated arrival effect from earlier quota allocations is fading, and the market is reverting to demand-driven dynamics.
Origin Mix: Brazil Dominates, US Cotton Rebounds on Order Rush
Brazil's share rose to 58%, maintaining its top position. US cotton gained 7 percentage points to 22%, driven by concentrated production for US-bound apparel orders—a short-term factor whose sustainability depends on trade policy and shipping timelines.
Australian cotton's share fell significantly due to tight spot supply. ABARES' June report estimated 2025/26 Australian output at 1 million tonnes (-16% YoY), with planted area down 12% to 6.825 million mu. Although irrigation support kept output 20% above the 10-year average, the interim supply gap has reached Chinese buyers. Kazakhstan and Afghanistan accounted for 5% and 4% respectively, indicating limited supplementary supply from Central Asia.
Trade Modes and Prices: Bonded Channels Dominate, Price Pass-Through Accelerates
Bonded warehouse entries remained at 45%, special customs supervision zone logistics at 43%, and general trade fell to 7%. The high bonded share suggests many imports remain 'pending entry,' reflecting buyer divergence on price direction.
Average import price rose 2.6% MoM to $1,699/tonne but fell 11.9% YoY. By origin: Brazil $1,615 (+2.1% MoM, -6% YoY), US $1,856 (+7.6%, -7.9%), Australia $1,948 (+8.3%, +7.3%). Australia's price rose YoY, linked to production cuts and quality premiums.
Downstream Exports: Garment Deliveries Peak, Fabric Replenishment Pauses
May textile and apparel exports totaled $25.61 billion (+6.5% MoM, -2.3% YoY). Garment exports reached $13.02 billion (+14.7% MoM, -4.1% YoY); textile exports $12.59 billion (-0.9% MoM, -0.3% YoY).
The garment surge came from concentrated summer order deliveries, while textile weakness indicates overseas fabric restocking has largely concluded. This suggests upstream yarn and grey fabric orders may weaken further in 1-2 months. January-May cumulative exports of $116.74 billion were flat YoY, indicating no trend growth but rather 'price-for-volume' or order front-loading.
Global Supply-Demand: Ending Stocks Down, Australia's Cut a Key Variable
USDA's June report showed 2025/26 global output up 3,300 tonnes (Egypt up, Argentina down), consumption down 5,400 tonnes (Bangladesh, Pakistan, S. Korea declines exceeded China, Vietnam gains), exports up over 1% (led by Brazil, US, Kazakhstan, Turkey), and ending stocks down 131,000 tonnes, with stocks-to-use ratio falling to 64%.
The inventory drawdown provides a floor for international prices. Australia's 16% output cut is the most prominent supply shock—while not enough to reverse global easing, it will widen the premium for high-grade cotton, affecting Chinese buyers' cost and blending strategies.