Domestic cotton prices experienced a classic surge-and-retreat cycle in May. On May 7, the CCIndex 3128B hit a 2.5-year high of 18,211 yuan/ton, driven by tight new-crop supply expectations and concentrated mill restocking. However, as the textile sector entered the traditional off-season with insufficient new orders and slowing production, prices gradually corrected. The month-end implementation of a new Xinjiang target price policy provided a brief boost, but the market ultimately closed with high-level volatility. The monthly average settled at 17,789 yuan/ton, up 23.1% year-on-year and 3.6% month-on-month.
Supply and Demand Under Dual Pressure
Yarn output growth slowed notably in May. National Bureau of Statistics data showed monthly yarn production of 1.869 million tons, up only 2.7% year-on-year and down 1% month-on-month. Xinjiang output reached 319,000 tons, up 18.6% year-on-year but down 3.6% month-on-month. The average price of 32s pure cotton yarn was 23,277 yuan/ton, up 795 yuan/ton month-on-month, but the gain lagged behind cotton, squeezing mill margins. Finished product inventories continued to accumulate, mill operating rates declined, and raw material procurement remained cautious. Cotton industrial inventory fell to 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year.
Exports showed structural improvement. May textile and apparel exports reached $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. Notably, exports to the US and EU grew 24.7% and 25.6% month-on-month respectively, while exports to Belt and Road countries rose 9.7%. Progress in US-China trade talks and the zero-tariff policy for Africa supported order return and emerging market demand.
Import Mix Shifts, Inventory Pressure Persists
Due to weak off-season demand, May cotton imports fell sharply month-on-month. Customs data showed imports of 113,000 tons, down 31.7% month-on-month but still up 2.3 times year-on-year. The import source mix shifted markedly: Brazilian cotton accounted for 57.7%, ranking first, while US cotton share rose to 22.1%. January-May cumulative imports reached 825,000 tons, up 91% year-on-year. Global supply remained ample, with the USDA May report raising 2025/26 world cotton production to 26.702 million tons, consumption to 26.156 million tons, and ending stocks to 16.823 million tons.
As of end-May, national commercial cotton inventory stood at 3.745 million tons, down 13.3% month-on-month but still up 8.3% year-on-year. This higher-than-last-year inventory indicates incomplete market digestion. The domestic-foreign price spread narrowed: the Cotlook A Index monthly average was 92 US cents/lb, equivalent to 15,518 yuan/ton at 1% tariff, 2,270 yuan lower than domestic cotton, with the spread narrowing by 257 yuan month-on-month.
Planting Complete, Seedling Conditions Lag
According to the China Cotton Association survey, as of end-May, national cotton planting progress reached 99.5%, slightly slower than last year. Xinjiang was fully completed, the Yellow River region reached 95.6%, and the Yangtze River region 99.3%. However, seedling conditions were concerning: 85.5% of cotton was at the 4-8 true leaf stage, down 8.9 percentage points year-on-year. Continuous rainfall in inland cotton areas caused waterlogging, delaying seedling growth. Only 45.9% of surveyed households rated seedling conditions as better than or equal to last year, a 34 percentage point drop year-on-year. Light disease incidence was reported in 76.8% of fields, down 3.2 percentage points year-on-year.
Industry Forum Builds Consensus, Origin Evaluation Launched
The 2026 China Cotton Industry Development Summit Forum was held in Chongqing on May 28-29, with nearly 400 domestic and international participants. Themed "Change and Reconstruction: Shaping a New Global Cotton Landscape," the forum focused on macro policies, industry chain collaboration, and risk management. The "China Cotton Night" event officially launched the origin evaluation of cotton products, which will have far-reaching implications for domestic cotton branding and traceability systems.