The global cotton market is witnessing an intense confrontation between bullish and bearish factors. The expectation of supply tightening and weak terminal demand have formed a clear standoff, causing domestic and international cotton prices to fluctuate narrowly over the past week. The main contract of Zhengzhou Cotton Futures hovered around 15,869 yuan per ton, while New York Cotton Futures fluctuated near 77.55 cents per pound, with the domestic-foreign price spread still as high as 3,140 yuan per ton.
Supply Side: Weather Risks and Planting Progress Divergence
From the perspective of major global producing regions, the narrative of supply tightening remains valid. According to the latest USDA data, as of June 21, the 2026/27 U.S. cotton planting progress had reached 92%, with the core production area of Texas at 90%. However, the good-to-excellent rate was only 44%, which, although an improvement of 9 percentage points year-on-year, is still at a relatively low level. This implies significant uncertainty in yield even if the planted area meets expectations.
India's monsoon rainfall is about 43% below the historical average, and meteorological departments predict weak rainfall in early July. Indian cotton cultivation heavily depends on monsoon precipitation from June to July. If the rainfall deficit persists, the new season's cotton output could face severe challenges. This expectation has already been reflected in international cotton prices, with New York cotton futures finding strong support around 77 cents per pound.
In China's Xinjiang, the main production area, the cotton squaring rate has reached 94-95%, with some plots beginning to flower sporadically. Overall growth progress is normal to slightly faster, but regional differentiation is evident: northern Xinjiang has favorable hydrothermal conditions and better growth, while southern Xinjiang faces irrigation pressure due to periodic high temperatures and enhanced evapotranspiration. Inland cotton areas are mostly in the squaring to early flowering stage, with generally stable growth. There is no systemic risk of reduced production at the current stage, but close attention must be paid to the impact of later-stage high temperatures and irrigation conditions on yield.
Demand Side: Off-Season Effects and Chemical Fiber Substitution
The impact of the traditional off-season in the textile industry is becoming apparent. The domestic average price of C32S carded yarn was 23,274 yuan per ton, up only 9 yuan per ton from the previous week; the price of polyester staple fiber fell by 128 yuan per ton to 7,365 yuan per ton. The continuous decline in chemical fiber prices has further strengthened the substitution effect for cotton. Imported yarn was 235 yuan per ton cheaper than domestic yarn, putting pressure on the domestic market.
Textile mills have shifted to conservative raw material procurement strategies. Current mill raw material inventories are low, with purchases limited to immediate needs and no willingness to build stocks. This contrasts sharply with the high inventory and high procurement pace of the same period last year, reflecting downstream uncertainty about future demand.
Macro and Policy: Easing Liquidity and Geopolitical Detente
The central bank injected 200 billion yuan through an expanded MLF operation, ensuring reasonable and ample liquidity, which helps lower capital market financing costs. According to the National Bureau of Statistics, from January to May, the total profits of industrial enterprises above designated size increased by 18.8% year-on-year, with the textile industry's profit up 11.7%. The continued release of policy dividends and the steady improvement of the industrial economy provide a bottom-line support for the textile industry.
The situation in the Middle East has shown a temporary detente. The U.S. and Iran signed a memorandum of understanding, opening the Strait of Hormuz for 60 days. International oil prices have fallen back to pre-conflict levels, with daily oil transport volume recovering to about 4.8 million barrels. This could release approximately 300,000 TEUs of shipping capacity, and ocean freight rates are expected to decline. This is a positive signal for textile companies that rely on imported cotton.
Comprehensive Judgment: Range-Bound Volatility Remains the Theme
In summary, the current cotton market is experiencing intensified long-short competition. On the demand side, the textile off-season and the enhanced substitution effect of chemical fibers are suppressing demand, with mills only purchasing for immediate needs. On the supply side, global weather uncertainty, domestic inventory destocking, and expectations of a year-on-year decline in new cotton production provide support. Given the clash between short-term weak demand and medium-to-long-term supply contraction, cotton prices are expected to maintain a range-bound volatile pattern in the near term.