The long-staple cotton market is experiencing a classic supply-demand standoff. In early July, warehouse quotes in Xinjiang remained high, but downstream spinners' purchasing willingness hit a low point. This phenomenon of firm prices coexisting with sluggish transactions reflects the deep game between upstream and downstream players in the off-season environment.
Dual Signals: High Prices and Cold Transactions
From actual quotes at southern Xinjiang warehouses, the 2025/26 crop 236/336 grade long-staple cotton (breaking tenacity 39-43 CN/TEX) remains firm at RMB 27,820 to 28,220 per ton. The 2024/25 crop 336 grade at Bazhou depot is also quoted at RMB 26,720 per ton. These price levels have not significantly loosened compared to previous months, indicating strong market confidence from cotton enterprises.
However, real demand has not kept pace with these price levels. Since late June, inquiries and transactions for long-staple cotton have remained low. Spinning mills have adopted a conservative 'just-in-time' procurement strategy to avoid tying up capital with large inventories during the off-season. This pattern of 'high offers, low deals' fundamentally reflects a divergence in price expectations between upstream and downstream.
Three Rationales Behind Price Support
Cotton enterprises' insistence on high prices during the off-season is not blind. Their decision is backed by at least three logical supports. First, as low-cost inventories from the 2023/24 and 2024/25 seasons are gradually depleted, the volume of cheap circulating cotton is shrinking, making the holding cost for new crop cotton naturally higher.
Second, concerns about the upcoming 2026/27 crop yield are a key factor. The Xinjiang producing region faces high temperatures in July-August, a critical period for cotton growth. Persistent heat or drought could impact both yield and fiber quality, providing a scarcity premium for existing stocks.
Finally, expectations for the traditional 'golden September and silver October' peak season encourage cotton enterprises to endure short-term financial pressure rather than selling at low prices. Some industry insiders even predict that this year's stocking-up may start as early as August, further reinforcing the wait-and-see attitude.
Downstream Dilemma: The Pass-Through Effect of High-Count Yarn Price Declines
The upstream's resolve faces hard constraints downstream. The textile industry is currently in a traditional off-season, with ex-factory prices for C50S and above high-count carded and combed yarns declining notably recently. This directly compresses spinners' profit margins and significantly reduces their capacity to absorb high-priced long-staple cotton.
For spinners, in the context of few new orders and rising product inventories, purchasing expensive raw materials means greater operational risk. Therefore, even if cotton enterprises offer slight concessions on warehouse fees, it is unlikely to change spinners' cautious stance. This pressure transmitting from the end market upstream is the fundamental reason for the current market stalemate.