In May, the domestic cotton market experienced a classic cycle of 'rally on expectations, retreat on weak reality.' The CCIndex 3128B hit 18,211 yuan per ton on May 7, a two-and-a-half-year high, before gradually falling back to a monthly average of 17,789 yuan per ton—up only 3.6% month-on-month but 23.1% year-on-year. This price action reflects the ongoing tug-of-war between off-season demand weakness and bullish policy signals.
Off-Season Effects Fully Manifest
May marked the traditional off-season for textiles, with insufficient new orders becoming the key constraint. National Bureau of Statistics data shows national yarn output at 1.869 million tons, up just 2.7% year-on-year and down 1% month-on-month, with Xinjiang's output falling 3.6% sequentially. The average price of 32-count pure cotton yarn was 23,277 yuan per ton, up 795 yuan per ton month-on-month, but the gain lagged behind cotton, squeezing mill margins.
Procurement strategies turned conservative. Industrial cotton inventory fell 3.5% month-on-month to 846,000 tons, down 10.1% year-on-year; commercial inventory fell 13.3% to 3.745 million tons but was still 8.3% higher than last year. This inventory structure shows limited downstream willingness to absorb high-priced cotton, with mills buying only for immediate needs.
Import Plunge Reveals True Demand
Customs data show May cotton imports at just 113,000 tons, a sharp 31.7% month-on-month decline, though still up 2.3 times year-on-year. Brazilian cotton accounted for 57.7% of imports, while US cotton's share rose to 22.1%. Cumulative imports from January to May reached 825,000 tons, up 91% year-on-year, but the May plunge signals a clear deceleration in import purchasing amid the off-season and high prices.
The USDA's May report raised 2025/26 global cotton production to 26.702 million tons, consumption to 26.156 million tons, and ending stocks to 16.823 million tons—all at multi-year highs. This ample global supply backdrop caps the premium on imported cotton.
Export Recovery but Structural Divergence
Textile and apparel exports in May hit $25.6 billion, up 6.5% month-on-month but down 2.3% year-on-year. Cotton garment exports were $2.04 billion, up 11.9% month-on-month but down 3.7% year-on-year. The recovery was driven by progress in US-China trade talks, China's zero-tariff policy for Africa, and strong month-on-month gains in US and EU markets (up 24.7% and 25.6% respectively). However, persistent year-on-year declines indicate external demand has not fully recovered.
New Crop Sowing Nearly Complete, Seedlings Weak
By end-May, national cotton sowing progress reached 99.5%, with Xinjiang fully planted. However, persistent rain in inland regions caused waterlogging, with the Yangtze River basin sowing progress lagging 6.9 percentage points year-on-year. Only 45.9% of surveyed farmers rated seedling conditions as better than last year, a sharp 34-percentage-point drop. 85.5% of cotton was at the 4-8 true leaf stage, down 8.9 percentage points year-on-year. Weak seedlings add uncertainty to the 2026/27 crop outlook, but global supply abundance has muted this factor's market impact.
Policy and Industry Consensus
Late May saw the launch of the new round of Xinjiang cotton target price policy, which briefly boosted sentiment but failed to reverse the off-season trend. Meanwhile, the 2026 China Cotton Industry Development Summit Forum was held in Chongqing, attracting nearly 400 domestic and international delegates. The forum focused on 'Change and Restructuring: Shaping a New Global Cotton Landscape' and officially launched a cotton product origin evaluation initiative. These policy and industry consensus moves provide a medium-term institutional foundation for supply chain stability, but short-term prices will remain hostage to the demand-inventory tug-of-war.