The long-staple cotton market is experiencing a rare coexistence of price support and weak transactions. Since late June, Xinjiang ginners and traders have generally raised their offer intentions, but spot transactions have remained sluggish, with prices failing to follow the rebound in Zhengzhou Cotton Futures. This divergence reflects a deep game between upstream and downstream, as well as between inventory structure and capital pressure.
Weakness on Both Supply and Demand Sides
On the demand side, the high-count yarn market is under dual pressure. Recently, ex-factory prices for C50S and above carded and combed yarns have seen significant declines, while insufficient new orders combined with the traditional off-season have sharply reduced mills' ability to digest high-priced long-staple cotton. Mills generally adopt a hand-to-mouth replenishment strategy and are reluctant to build long-term inventory.
On the supply side, a gap is forming as old crop stocks dwindle and new crop conditions remain uncertain. Low-priced old crop from 2023/24 and 2024/25 is being depleted, while the 2026/27 new crop faces potential impacts from July-August high temperatures on yield and quality. It is precisely this supply gap expectation that gives cotton enterprises the confidence to maintain prices despite weak transactions.
Price Anchors and Inventory Game
From specific quotes, a clear price stratification has emerged. 2024/25 336 long-staple cotton from Bazhou is offered at 26,720 yuan/ton, while 2025/26 236/336 long-staple cotton from Alar and Aksu ranges from 27,820 to 28,220 yuan/ton. Non-grade long-staple cotton from southern Xinjiang is quoted around 27,520 yuan/ton. The price difference between old and new crop is about 1,100-1,500 yuan/ton, reflecting enterprises' willingness to make concessions on old crop destocking while insisting on a premium for new crop quality.
What does this price structure mean for buyers? On one hand, low-priced old crop is being cleared quickly, narrowing the window for bargain purchases. On the other hand, if the traditional peak season starts early in August, cotton enterprises' pricing power will strengthen further. However, the risk is that if downstream demand recovery disappoints, high-priced new crop may face a market with no takers.
Industry Transmission and Capital Pressure
It is worth noting that price support comes at a cost. Storage fees and capital occupation costs are racing against time. Some cotton enterprises have explicitly stated that 'warehouse fees are negotiable if the client is interested,' implying that while maintaining firm offers, they are willing to share storage costs to facilitate transactions. This is essentially a hidden price cut.
For textile mills, the core strategy is balancing procurement cost and supply security. Over-waiting for price drops may cause them to miss the last chance for low-priced old crop. But entering now risks further compression of high-count yarn profit margins.