Long-staple cotton market locked in supply-demand tug-of-war: price support versus destocking

The long-staple cotton market is currently locked in a classic tug-of-war between upstream and downstream players. On one side, ginners and traders, burdened by high inventory costs and concerned about future supply, are keen to support prices and hold back sales. On the other, spinners, facing weak demand for high-count yarns and a scarcity of new orders, stick to a hand-to-mouth buying strategy and refuse to chase higher prices. This mismatch in expectations has resulted in a stalemate since late June, with spot quotes stabilizing but transactions remaining sluggish.

Price Anchoring and Market Divergence

Based on public quotes, the long-staple cotton price system has formed clear tiers. In Xinjiang's Bazhou region, 2024/25 crop grade 336 (breaking tenacity 38-40 cN/tex) original bales are quoted at a fixed price of 26,720 yuan/ton, with the seller covering warehouse-in/out fees and storage costs before title transfer, and warehouse charges negotiable. At supervised warehouses in southern Xinjiang's Alar and Aksu regions, 2025/26 crop grades 236/336 (breaking tenacity 39-43 cN/tex) are quoted at a fixed price range of 27,820-28,220 yuan/ton. Additionally, some non-grade long-staple cotton with 37mm length and 40 cN/tex breaking tenacity is quoted at around 27,520 yuan/ton.

Notably, although Zhengzhou Cotton Futures saw a strong rebound in late June, spot quotes for long-staple cotton did not follow suit. This suggests that while mills are keen to support prices, they are extremely cautious about raising them—they are well aware that the market lacks sufficient demand to absorb higher prices. This 'wanting to raise but afraid to do so' mentality reflects the fragile balance of supply and demand fundamentals.

Downstream Transmission: The Chain Reaction of Shrinking High-Count Yarn Margins

The direct pressure on long-staple cotton prices comes from downstream. Since June, ex-factory prices for C50S and above high-count carded and combed yarns have dropped significantly. Against the backdrop of the textile industry's traditional off-season and a shortage of new orders, spinners' ability to absorb expensive long-staple cotton has weakened considerably. The compression of high-count yarn profit margins has dampened spinners' willingness to purchase long-staple cotton to a freezing point, leading them to adopt a 'buy-as-needed, small-lot frequent' replenishment strategy to avoid building inventory during a price downtrend.

This transmission mechanism clearly reveals the fragile link in the industry chain: when end-consumer apparel demand is weak and high-count yarn demand shrinks, upstream raw materials, even with strong cost support, cannot stand alone. The logic behind supporting long-staple cotton prices is essentially a bet on the future—a bet on a new-crop production decline, depletion of old-crop stocks, and a recovery in demand during the 'Golden September and Silver October' season.

Supply-Side Support: Inventory Structure Shift and Weather Gambit

The mills' confidence in supporting prices is not unfounded. On one hand, low-priced 2023/24 and 2024/25 old-crop stocks are being rapidly consumed. As time passes, the availability of cheap supply will diminish, providing a floor for 2025/26 new-crop quotes. On the other hand, concerns that July-August heatwaves could negatively impact 2026/27 new-crop yields and quality are reinforcing mills' reluctance to sell.

Xinjiang, as the primary production region for long-staple cotton, directly influences market sentiment with its weather conditions. If high temperatures and drought persist, key indicators such as per-unit yield, fiber length, and strength of the new crop may be compromised, potentially widening the supply gap for quality long-staple cotton. Additionally, some mills anticipate that the 'Golden September and Silver October' peak season could start as early as August, providing a psychological basis for current price support.

Practical Recommendations

For Buyers - The current long-staple cotton spot market is in a price stalemate. There is no rush to chase high prices. Prioritize consuming existing inventory or purchasing low-priced 2023/24 and 2024/25 old-crop stocks to reduce raw material costs. - Closely monitor Xinjiang weather patterns and new-crop growth conditions in July-August. If extreme weather leads to heightened production decline expectations, consider locking in some 2025/26 crop supply moderately ahead of time, but control purchase volumes to avoid overstocking before demand clarity. - Leverage the current buyer's market to negotiate terms such as warehouse charges and payment cycles, reducing overall procurement costs.

For Exporters - High-count yarn export orders are unlikely to recover significantly in the short term due to overseas consumption downgrades. Diversify product mix toward medium-count yarns and differentiated blended yarns to reduce reliance on long-staple cotton, and explore emerging markets such as Southeast Asia and the Middle East. - Monitor RMB exchange rate fluctuations and ocean freight trends. Given the high uncertainty in the current foreign trade environment, when signing long-term contracts with overseas clients, include price adjustment clauses or use short-term contracts to hedge against raw material price volatility. - Use the off-season for customer relationship maintenance and market research to prepare for the 'Golden September and Silver October' order rebound. Establish flexible supply agreements with upstream suppliers in advance to ensure stable raw material supply during the peak season.