In May 2026, domestic cotton prices experienced a full cycle of surge and retreat. Early-month supply concerns and concentrated restocking pushed the CCIndex 3128B to 18,211 yuan/ton, a two-and-a-half-year high. However, weak off-season demand quickly broke price support. By month-end, the monthly average price settled at 17,789 yuan/ton, up only 3.6% month-on-month but still 23.1% year-on-year.
Supply and Demand Both Weaken
On the production side, yarn output growth slowed notably. National Bureau of Statistics data shows May yarn output at 1.869 million tons, up only 2.7% year-on-year and down 1% month-on-month. Xinjiang contributed 319,000 tons, down 3.6% month-on-month despite an 18.6% year-on-year increase. The average price of 32-count pure cotton yarn was 23,277 yuan/ton, up 795 yuan/ton month-on-month, but the gain lagged behind cotton, squeezing mill margins.
On the demand side, insufficient new orders forced mills to adopt just-in-time purchasing. Cotton industrial inventory stood at 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year. Commercial inventory of 3.745 million tons, though down 13.3% month-on-month, was still 8.3% higher than last year. Import demand also cooled, with May imports at just 113,000 tons, plunging 31.7% month-on-month but still up 2.3 times year-on-year. Brazilian cotton accounted for 57.7%, while US cotton share rose to 22.1%.
Export Recovery but Domestic Weakness
Textile and apparel exports showed structural improvement. Customs data shows May exports at $25.6 billion, up 6.5% month-on-month but down 2.3% year-on-year. January-May cumulative exports reached $116.73 billion, up 0.1% year-on-year. Exports to the US and EU grew 24.7% and 25.6% month-on-month respectively. Cotton garment exports were $2.04 billion, up 11.9% month-on-month but down 3.7% year-on-year. Order回流 from the US and EU, combined with narrowing tariff advantages in Southeast Asia, supported export recovery, but domestic demand remained weak.
New Crop Planting Complete, Seedling Condition Poor
National cotton planting progress reached 99.5%, but seedling conditions generally lagged last year. Continuous rainfall in inland cotton areas caused waterlogging, slowing seedling growth. By month-end, 85.5% of cotton was at the 4-8 true leaf stage, down 8.9 percentage points year-on-year. Only 45.9% of surveyed households rated seedling conditions better than last year, down 34 percentage points. Xinjiang cotton areas had favorable light and temperature, with some fields entering the squaring stage. Planting area was stable with a slight decline year-on-year, but weather disruptions may affect yields.
Global Supply-Demand Loose Weighs on Prices
USDA's May report raised 2025/26 global cotton production to 26.702 million tons, consumption to 26.156 million tons, and ending stocks to 16.823 million tons, all at multi-year highs. International cotton prices rose then fell, with the Cotlook A index averaging 92 cents/lb, up 18% year-on-year, but dragged down by a strong US dollar and poor US export performance. The domestic-international price spread narrowed to 2,270 yuan/ton, down 257 yuan from April, reducing the price advantage of imported cotton.