The cotton price stalemate is testing the patience of the textile supply chain. Over the past week, the average settlement price of Zhengzhou Cotton Futures' main contract stood at 15,869 yuan/ton, down 0.2% from the previous week, while international cotton prices hovered around 77 cents/lb, with the domestic-international spread remaining at a high of 3,140 yuan/ton. This narrow fluctuation masks a persistent tug-of-war between tightening supply expectations and weak demand.
Industry Impact
The most prominent contradiction in the current cotton market is that the expectation of tighter global supply has not dissipated despite short-term price stability. USDA data shows that as of June 21, the 2026/27 US cotton planting progress reached 92%, but the good-to-excellent rating was only 44%. While this is 9 percentage points higher year-on-year, it remains at a low level. The core producing state of Texas has a planting rate of 90%, but drought relief has been limited, leaving future yields uncertain.
More alarming is the abnormal monsoon rainfall in India. India's Ministry of Agriculture reports that, as of this week, monsoon rainfall is about 43% below the historical average, and meteorological agencies predict continued weak rainfall in early July. Indian cotton cultivation heavily depends on monsoon precipitation from June to July. If the deficit persists, new-season production could face severe impacts. What does this mean for the global cotton supply pattern? For China, the largest consumer, the stability of import sources will be tested.
In China's Xinjiang region, cotton growth is progressing normally, with a squaring rate of about 94-95%, but regional divergence is evident: northern Xinjiang has better hydrothermal conditions, while southern Xinjiang faces localized irrigation pressure due to periodic high temperatures and enhanced evapotranspiration. Inland cotton areas are generally stable. Currently, there is no systemic risk of production cuts, but the impact of later-season high temperatures and irrigation conditions on yields requires continuous monitoring.
On the demand side, typical off-season characteristics prevail. Spinning mills maintain low raw material inventories and adopt a just-in-time procurement strategy. The domestic C32S combed yarn average price was 23,274 yuan/ton, up only 9 yuan/ton from the previous week. Polyester staple fiber prices fell by 128 yuan/ton to 7,365 yuan/ton, accelerating the substitution effect of synthetic fibers. Imported yarn was 235 yuan/ton cheaper than domestic yarn, continuously squeezing the profit margins of domestic mills.
At the macro level, the easing of tensions in the Middle East brings a glimmer of hope. Following the signing of a memorandum of understanding between the US and Iran, the Strait of Hormuz has been temporarily opened for 60 days, with daily oil transport volumes recovering to about 4.8 million barrels. This is expected to release approximately 300,000 standard containers of shipping capacity, alleviating previous container shortages and berth congestion, and potentially lowering freight rates. This will positively impact logistics costs and delivery cycles for textile foreign trade companies.
Domestic monetary policy is also providing support. The central bank injected a net 200 billion yuan through increased MLF operations, ensuring reasonable liquidity and helping to lower capital market financing costs. National Bureau of Statistics data shows that from January to May, the total profit of industrial enterprises above designated size grew 18.8% year-on-year, with the textile industry's profit up 11.7%, demonstrating good resilience. This means that despite weak short-term demand, the industry's overall profitability has not deteriorated.