The long-staple cotton market is at a delicate crossroads. Since late June 2026, spot transactions have remained sluggish, but cotton enterprises have shown no sign of backing down on prices, creating a rare supply-demand standoff. According to industry public data, as of early July, the fixed price for 2024/25 grade 336 long-staple cotton at Bazhou warehouses stood at 26,720 yuan per ton, while quotes for 2025/26 grades 236/336 in Aksu and other areas ranged from 27,820 to 28,220 yuan per ton. Yet, behind these quotes, actual deals are scarce.
This phenomenon is not isolated. The Zhengzhou cotton futures market saw a strong rebound during the same period, but spot prices for long-staple cotton remained unchanged, indicating that the current market driver is not speculative demand but rather the cost-profit tug-of-war within the industry chain.
Industry Impact: Profit Scissors Between Upstream and Downstream
The stalemate in the long-staple cotton market stems from uneven profit distribution along the supply chain. On one hand, spinning mills are under pressure from recent sharp declines in high-count yarn (C50S and above) ex-factory prices. Against the backdrop of fewer new orders and an overall industry off-season, mills' ability to absorb high-priced long-staple cotton is significantly weakened. Their procurement strategy has fully shifted to 'buy-as-needed,' refusing to build inventory.
On the other hand, cotton enterprises' price-holding confidence comes from three supports: first, concerns about the output and quality indicators of the 2026/27 new crop under high temperatures in July-August, anticipating tighter future supply; second, the gradual depletion of low-cost old-crop inventories from 2023/24 and 2024/25, reducing market availability of cheap sources; third, optimism that the 'golden September and silver October' peak season may start early in August, potentially reviving demand.
This divergence in expectations between upstream and downstream has led to a breakdown in the price transmission mechanism. Cotton firms want to pass cost pressures downstream, but spinners cannot absorb them due to weak end-user demand.
Regional Industrial Belt Response: Pricing Power Game in Southern Xinjiang
From a regional perspective, Southern Xinjiang's Aksu, Aral, and Bazhou areas are core producing zones for long-staple cotton. The current price differences among various warehouses reflect subtle variations in quality and inventory structure. The Bazhou warehouse's 336 grade quotes are relatively lower, with sellers willing to cover loading and storage fees, indicating some desire to destock. In contrast, high-quality long-staple cotton from Aksu and Aral commands firm prices with limited room for negotiation.
This regional divergence means buyers have more options when sourcing, but premium resources have extremely low price elasticity. For textile mills relying on high-count yarn production, once the peak season arrives, they may face the dilemma of high-quality long-staple cotton being 'available but unaffordable.'
Practical Recommendations
For Buyers - Currently, focus on relatively cheaper sources like Bazhou warehouses, leveraging sellers' destocking mentality to negotiate storage fee discounts. - Maintain a wait-and-see approach for high-quality long-staple cotton (e.g., 2025/26 grades 236/336), but set a psychological price ceiling to avoid being forced to accept high prices during peak season. - Strengthen futures hedging operations, using Zhengzhou cotton futures fluctuations to offset spot procurement risks.
For Foreign Trade Companies - When exporting high-count yarn orders, include raw material price fluctuation clauses in contracts to prevent sudden cost increases from eroding profits. - Monitor demand changes in Southeast Asian markets after August; if the 'golden September and silver October' expectations fail to materialize, domestic mills may further cut long-staple cotton purchases. - Explore alternative raw material solutions, such as using high-quality fine-staple cotton blends, to reduce sole reliance on long-staple cotton.
The short-term stalemate in the long-staple cotton market is essentially a reflection of diverging industry expectations for second-half demand. Whether cotton enterprises' price-holding stance can persist depends on whether the August peak season arrives as anticipated. For industry practitioners, the current need is not to bet on direction but to make flexible inventory management decisions based on their own cash flow and order structure.