In the first half of 2026, the main contract of Zhengzhou cotton futures started at 14,600 yuan per ton, driven by expectations of reduced planting area and expanding downstream demand, once approaching a two-year high of 17,000 yuan per ton. However, due to the traditional off-season and accumulated downstream pressure, prices fell back. The cumulative increase for the first half was locked at 10.25%. Behind this data is a microcosm of the ongoing game between market expectations and reality.
Planting Area Expectations Fall Short, Supply Support Weakens
The widely anticipated significant reduction in planting area did not materialize. The actual national cotton planting area for 2026 was 46.32 million mu, a year-on-year decrease of only 3.1%, far below the market expectation of 8-10%. Xinjiang's actual planting was 41.535 million mu, down 3.4% year-on-year, mainly due to policy guidance for withdrawing low-yield fields; the inland area was 4.568 million mu, a slight decrease of 0.2% year-on-year. The extension of the 18,600 yuan per ton subsidy standard to 2028 effectively stabilized farmers' planting enthusiasm, which is the core reason for the actual area being higher than the intended area.
For buyers, this signal means that the bullish logic based on a significant reduction in area needs to be revised. The weakening of supply contraction is weaker than expected, which will directly weaken the fundamental driving force for cotton price increases.
Inventory Structure Diverges, De-stocking Pace Slows
Commercial inventory data shows clear regional divergence. In the first half, inventories continued to decline from a peak of 5.6981 million tons at the beginning of the year, falling to 3.1242 million tons by the end of June, a cumulative decrease of 41%. However, Xinjiang stocks have tightened to 1.9439 million tons, while port import cotton stocks remain high at 600,000 tons. This pattern of "tight in Xinjiang, loose at ports" reflects a structural contradiction in domestic supply—high-quality Xinjiang cotton resources are tightening, while imported cotton, despite its price advantage, is flowing in but being digested slowly.
In the second half, July and August are still the off-season for consumption, and the de-stocking pace will further slow down. After the new cotton comes on the market in September and October, inventories will quickly rebound from their low point, and supply pressure will reappear. For textile enterprises, it is crucial to focus on the restocking window and price volatility risks at the end of the third quarter.
Imports Surge, Brazilian Cotton Dominance Takes Shape
From January to May 2026, China's cotton imports were approximately 826,000 tons, a significant year-on-year increase of about 89%. Among them, Brazilian cotton accounted for as high as 60%, with its monthly import share even exceeding 70%, firmly establishing it as the largest source country. US cotton imports were about 90,000 tons, accounting for 11%, ranking second. With its price advantage and ample supply capacity, Brazilian cotton is reshaping China's cotton import pattern.
This trend has a profound impact on the procurement strategies of foreign trade enterprises. The stable supply of Brazilian cotton reduces China's dependence on US cotton, but it also means that international market price fluctuations will be more directly transmitted domestically. Enterprises need to establish diversified procurement channels to hedge against risks from a single source.
Spinning Mill Operating Rates Show Weak Recovery, Negative Feedback Accumulates Downstream
In the first half, spinning mill operating rates exhibited a typical pattern of "rising in peak season, falling in off-season." The operating rate once peaked at 78.6% in late March, but subsequently, as cotton prices rose much faster than yarn prices, immediate profits for inland spinning mills turned to losses, and willingness to operate declined. By the end of June, the operating rate had fallen to 74.2%. Inventories of yarn and gray fabric shifted from decreasing to increasing, and negative feedback downstream is accumulating.
There is a clear divergence between large and small enterprises: large mills have full orders, while small and medium-sized enterprises face operational difficulties. This structural divergence means that the overall foundation for downstream demand recovery is not solid. Whether the "golden September and silver October" can drive operating rates to rise again depends on the actual implementation of autumn and winter orders.
Weather Variables Heat Up, Yield Uncertainty Remains
The Xinjiang cotton region is currently in the peak flowering period, but most of Xinjiang is experiencing high temperatures, with local temperatures expected to exceed 40°C. Some cotton fields in Bazhou, Turpan, Hami, and other areas face a high risk of heat damage. Inland areas along the Yangtze River are experiencing excessive rainfall and insufficient sunlight, which is detrimental to cotton growth and development. Weather factors are becoming the core variable for short-term price fluctuations in the second half.
If high temperatures continue to affect yields, actual production may still fall short of expectations even if the reduction in planting area is limited. This would provide new upward momentum for cotton prices. Conversely, if weather conditions improve, supply pressure will become more prominent.