In May 2026, domestic cotton prices experienced a sharp rise followed by a correction. Driven by tight new-crop supply expectations and concentrated mill restocking, the CCIndex 3128B hit a two-and-a-half-year high of 18,211 yuan per ton on May 7. However, as the traditional textile off-season deepened, weak demand pulled prices back, with the monthly average settling at 17,789 yuan per ton, up 23.1% year-on-year and 3.6% month-on-month. This data clearly highlights the core contradiction in the current market: the mismatch between policy expectations and industrial reality.
Demand Side: Off-Season Effects and Profit Squeeze Slow Procurement
According to the National Bureau of Statistics, national yarn output in May was 1.869 million tons, up only 2.7% year-on-year and down 1% month-on-month. Xinjiang produced 319,000 tons, up 18.6% year-on-year but down 3.6% month-on-month. Behind the slowing output growth is a lack of new orders. Mills report that cotton yarn prices have risen, but at a much slower pace than cotton. The average price of 32s pure cotton yarn was 23,277 yuan per ton, up 795 yuan month-on-month (3.5%), far below the 3.6% monthly increase in cotton spot prices. This means mill profit margins are being squeezed, reducing their willingness to accept high-priced cotton.
Procurement behavior confirms this assessment. Cotton imports in May were only 113,000 tons, down 31.7% month-on-month. Commercial inventories fell 13.3% month-on-month to 3.745 million tons but were still 8.3% higher year-on-year, indicating slower-than-expected destocking. Mills are mainly making small replenishments at low prices, focusing on just-in-time purchases. Industrial inventories stood at 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year, reflecting cautious inventory control.
On the export front, customs data show textile and apparel exports reached $25.6 billion in May, up 6.5% month-on-month but down 2.3% year-on-year. The January-May cumulative figure was only up 0.1% year-on-year. Exports to the US and EU surged 24.7% and 25.6% month-on-month respectively, indicating a phase of order回流. However, whether these gains are sustainable depends on the trajectory of Sino-US trade talks and the recovery of overseas end-consumer demand.
Supply Side: Planting Complete but Seedlings Weak, Import Landscape Shifts
The China Cotton Association survey shows that as of end-May, national cotton planting progress was 99.5%, essentially complete. However, seedling conditions are worrying: only 45.9% of surveyed households rated seedlings as better than or equal to last year, a sharp 34 percentage point decline year-on-year. Persistent rainfall in inland cotton areas has caused waterlogging, delaying seedling growth. Nationwide, 85.5% of cotton was in the 4-8 true leaf stage, down 8.9 percentage points year-on-year. Local weather disruptions add uncertainty to new-crop production expectations.
On imports, May cotton imports were 113,000 tons, up 2.3 times year-on-year but down 31.7% month-on-month. Brazilian cotton accounted for 57.7%, while US cotton’s share rose to 22.1%. January-May cumulative imports reached 825,000 tons, up 91% year-on-year. The USDA May report raised 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. The global supply-demand surplus is pressuring international cotton prices. The May Cotlook A index averaged 92 US cents per pound, which after 1% tariff is 2,270 yuan lower than domestic prices. Although the spread narrowed by 257 yuan from April, it remains at a relatively high level.
Policy and Market Sentiment: Target Price Policy Provides Floor but Can't Reverse Short-Term Weakness
In late May, the new round of Xinjiang cotton target price policy was officially announced, giving the market a short-term boost. However, the policy mainly affects medium-to-long-term planting expectations and has limited impact on spot demand. Meanwhile, positive progress in Sino-US trade talks has lifted industry confidence, but mills are adopting a wait-and-see attitude, awaiting actual order placements.
At the 2026 China Cotton Industry Development Summit Forum held in Chongqing on May 28-29, nearly 400 delegates discussed the theme "Change and Restructuring: Shaping a New Global Cotton Pattern." The launch of a cotton product origin evaluation program during the event may have long-term implications for export certification and brand premiums, but it won't change the supply-demand fundamentals in the short term.
Overall, the current cotton market is in a "ceiling and floor" pattern. Upside is capped by weak off-season demand and ample global supply, while downside is supported by policy costs and planting costs. For buyers and foreign trade companies, during periods of high-level volatility, flexible inventory strategies and avoiding directional bets are more pragmatic than trying to predict price direction.