The long-staple cotton market is locked in a classic tug-of-war: downstream mills, squeezed by narrowing margins on high-count yarns, have become increasingly cautious in raw material procurement; while upstream ginners and traders, banking on depleted old-crop inventories, expectations of new-crop output decline, and an early peak season, hold firm on prices. This standoff has been particularly evident since late June, with spot transactions sluggish but prices stable despite a rebound in Zhengzhou cotton futures.
The Divergent Logic of Supply and Demand
On the demand side, mills have shifted from active stocking to passive replenishment. Ex-factory prices for C50S and above high-count carded and combed yarns have fallen significantly since June. With limited new orders and the traditional off-season, mills' capacity to absorb high-priced long-staple cotton has weakened. Their hand-to-mouth buying strategy means that, unless the yarn market reverses, upstream will struggle to secure purchasing support.
Supply-side sentiment tells a different story. Despite weak inquiries, ginners and traders in Xinjiang remain resolute in price support. Their confidence rests on three pillars: first, low-priced inventories from the 2023/24 and 2024/25 seasons are rapidly depleting, leaving fewer cheap resources in the market; second, concerns over the 2026/27 new-crop output—high temperatures in July and August could affect cotton quality and yield; third, the traditional 'Golden September and Silver October' peak season is expected to start as early as August, potentially reviving demand.
Regional Price Differentials and Market Signals
Actual quotes reveal a clear price spread across origins and crop years. In early July, 2024/25 crop grade 336 long-staple cotton (strength 38-40 cN/tex) in Bazhou warehouses was offered at 26,720 yuan per ton, with storage fees negotiable. In contrast, 2025/26 crop grade 236/336 long-staple cotton (strength 39-43 cN/tex) in Aksu and Aral was quoted at 27,820-28,220 yuan per ton. Long-staple cotton without grade designation but with 37mm length and 40 cN/tex strength in southern Xinjiang was priced around 27,520 yuan per ton.
This data sends two signals. First, the spread between old and new crops exceeds 1,000 yuan per ton, indicating that the market has begun pricing in the scarcity of old-crop supplies. Second, within the same crop year, the price differential between grades and origins is narrow, suggesting that current prices are more cost-supported and expectation-driven than transaction-driven.
Ripple Effects Across the Supply Chain
The price support strategy is reshaping profit distribution. For spinners, high raw material costs coupled with falling yarn prices have compressed high-count yarn processing margins to multi-year lows. If this persists, some small and medium mills may reduce high-count yarn output in favor of medium-count or differentiated products, further dampening long-staple cotton demand.
For ginners and traders, the current pricing is a bet on market timing. If the peak season arrives as expected and new-crop output falls short, the price support will yield handsome profits. But if demand recovery disappoints or new-crop output exceeds forecasts, high-priced inventories could face significant devaluation risks.