In May 2026, domestic cotton prices staged a dramatic sprint and then stalled. The CCIndex 3128B hit a 2.5-year high of 18,211 yuan/ton on May 7, but quickly retreated amid weakening demand. The monthly average settled at 17,789 yuan/ton, up 23.1% year-on-year but only 3.6% month-on-month. This volatility signals the textile industry's traditional off-season, with insufficient new orders and cautious purchasing behavior.
Production and Exports: Slowing Momentum
National Bureau of Statistics data shows May yarn output at 1.869 million tons, up just 2.7% year-on-year and down 1% month-on-month. Xinjiang contributed 319,000 tons, up 18.6% YoY but down 3.6% MoM. Meanwhile, 32-count pure cotton yarn averaged 23,277 yuan/ton, a monthly increase of 795 yuan, but this rise lagged far behind cotton price gains, compressing mill margins. For buyers, this suggests limited downstream acceptance of higher prices, with profits concentrating upstream.
Exports showed structural improvement. Textile and apparel exports reached $25.6 billion in May, up 6.5% MoM but down 2.3% YoY. Notably, exports to the US and EU surged 24.7% and 25.6% month-on-month, respectively, far outpacing the 9.7% growth to Belt and Road countries. This reflects a temporary restocking boost from US-China trade progress, but sustainability is uncertain. Cotton garment exports hit $2.04 billion, up 11.9% MoM but down 3.7% YoY, indicating weaker recovery than man-made fiber products.
Imports and Inventories: Supply-Demand Balance Tilts
Cotton imports fell sharply in May to just 113,000 tons, down 31.7% month-on-month, though still up 2.3 times year-on-year. Brazilian cotton accounted for 57.7% of the total, while US cotton rose to 22.1%. Cumulative imports for January-May reached 825,000 tons, up 91% YoY, reflecting heavy arrivals earlier in the year. The USDA's May report raised global production to 26.702 million tons and consumption to 26.156 million tons, with ending stocks at 16.823 million tons, signaling a looser global balance.
Commercial inventories stood at 3.745 million tons at end-May, down 13.3% from April but up 8.3% year-on-year. Industrial inventories fell to 846,000 tons, down 3.5% MoM and 10.1% YoY. This 'high commercial, low industrial' structure suggests upstream traders are under pressure while mills hold the upper hand in procurement.
International Prices and Spreads Narrow
The Cotlook A index averaged 92 US cents/pound in May, up 18% YoY and 6.5% MoM. After applying a 1% tariff, the landed price was 15,518 yuan/ton, 2,270 yuan below domestic cotton, with the spread narrowing 257 yuan from April. The narrowing spread dampened import demand, contributing to May's import decline. But the gap remains wide, putting pressure on China's import quota management and reserve release policies.
Crop Conditions: Xinjiang Stable, Inland Weaker
By end-May, national cotton planting progress was 99.5%, with Xinjiang fully completed. Inland regions faced persistent rainfall: the Yellow River basin reached 95.6% (1.4 percentage points slower YoY), and the Yangtze River basin 99.3% (6.9 points slower). Only 45.9% of surveyed farmers rated seedling conditions as better or equal to last year, down 34 percentage points. Waterlogging has stunted growth, with 85.5% of cotton at the 4-8 true leaf stage, 8.9 points lower than last year. Some Xinjiang fields have entered the budding stage, but overall development lags. If weather doesn't improve, new crop quality may suffer, affecting seed cotton prices.
Industry Summit Signals Restructuring
The 2026 China Cotton Development Summit Forum, held in Chongqing on May 28-29, drew nearly 400 delegates under the theme 'Change and Restructuring: Shaping a New Global Cotton Landscape'. The event launched a cotton product origin evaluation initiative, aimed at enhancing brand recognition of Chinese cotton goods amid international controversies over Xinjiang cotton. For exporters, this evaluation system could become a new market access tool or barrier.