Cotton prices staged a roller-coaster ride in May. The CCIndex 3128B hit a 2.5-year high of 18,211 yuan/ton at the beginning of the month but retreated to around 17,789 yuan/ton by month-end, with the monthly average still up 23.1% year-on-year. This trajectory reflects a tug-of-war between weakening seasonal demand and supportive policy expectations.
Background
The textile industry entered its traditional off-season in May, with a widespread shortage of new orders. Yarn output growth slowed markedly: national yarn production reached 1.869 million tons, up 2.7% year-on-year but down 1% month-on-month. Xinjiang, as the main production base, produced 319,000 tons, still up 18.6% year-on-year but down 3.6% from April. Companies adopted a conservative procurement strategy, replenishing stocks only at lower prices. Commercial cotton stocks fell 13.3% month-on-month to 3.745 million tons but remained 8.3% higher than a year earlier.
Notably, exports showed structural improvement. Customs data show textile and apparel exports reached $25.6 billion in May, up 6.5% month-on-month, with exports to the US and EU surging 24.7% and 25.6% respectively. Progress in US-China trade talks and the implementation of zero-tariff policies for Africa have brought some orders back. However, year-on-year exports still fell 2.3%, indicating incomplete recovery in external demand.
Cotton imports plunged 31.7% month-on-month to 113,000 tons, with Brazilian cotton accounting for 57.7% and US cotton rising to 22.1%. Cumulative imports from January to May reached 825,000 tons, up 91% year-on-year, as companies had already built large inventories earlier. The USDA's May report raised global cotton production to 26.702 million tons and consumption to 26.156 million tons, with ending stocks at 16.823 million tons—all at multi-year highs, confirming a global supply-demand surplus.
Industry Impact
High cotton prices directly squeezed spinners' profit margins. The average price of 32s pure cotton yarn was 23,277 yuan/ton in May, up 795 yuan/ton month-on-month but with weaker gains than cotton. Industrial cotton stocks fell to 846,000 tons, down 3.5% month-on-month and 10.1% year-on-year, reflecting companies' resistance to high cotton prices and concerns over rising finished goods inventories.
The slow progress of new cotton planting added uncertainty. By end-May, national planting progress was 99.5%, but the Yellow River and Yangtze River regions lagged by 1.4 and 6.9 percentage points respectively. Persistent rainfall in inland cotton areas caused waterlogging, with seedling conditions significantly worse than last year. Only 45.9% of surveyed farmers rated seedling conditions as better or equal to last year, a sharp 34 percentage point drop. This suggests potential quality and quantity challenges for the new crop.
At the 2026 China Cotton Industry Development Summit Forum in Chongqing, "Change and Reconstruction" was the core theme. Nearly 400 domestic and international delegates attended, and the launch of cotton product origin evaluation work could have long-term implications for global cotton trade flows.