In early July, the Xinjiang long-staple cotton spot market presents a contradictory signal: despite persistently weak sales of high-count yarns during the industry's off-season, spot prices remain remarkably firm. Some cotton enterprises have even narrowed their discount margins for returning customers, intensifying the standoff between buyers and sellers.
The Dual Logic of Inventory and Pricing
From the supply side, the reluctance to sell among cotton enterprises is a key price support. According to publicly available industry data, a major cotton trader in the Aksu region now holds only 11 batches of machine-picked long-staple cotton from the 2025/26 season, stored in supervised warehouses. The trader explicitly indicates no urgency to sell, preferring to offer 'package deals' to larger textile mills rather than engaging in piecemeal single-batch transactions. This strategy is directly reflected in pricing: on July 8-9, 2024/25 long-staple cotton in Bazhou, southern Xinjiang, was quoted at 26,720-26,920 yuan per tonne on a fixed-price basis, while 2025/26 long-staple cotton in Aksu was quoted at 28,220 yuan per tonne, both little changed from late June.
Meanwhile, the demand side tells a different story. Spinners in Shandong, Jiangsu, and Henan provinces report that domestic warehouse stocks are concentrated in a few locations like Zibo, Weifang, and Jiangyin. Mills are maintaining a 'light inventory' strategy, purchasing only on a need-based basis. To accommodate this fragmented buying pattern, some traders now allow half-batch withdrawals, though contracts are still signed for full batches. This 'full-batch contract, partial withdrawal' model highlights the deepening strategic divergence between upstream and downstream players.
External Variables and Internal Transmission
Notably, the USDA projects 2026/27 US Pima cotton planted area at 150,000 acres, a 6% year-on-year increase. This expectation might have pressured domestic prices, but so far the impact on Xinjiang long-staple cotton quotes is minimal. Two factors explain this: first, domestic mills are reducing reliance on imported cotton, especially in the high-count yarn segment, where Xinjiang long-staple cotton's substitution effect is strengthening; second, the Pima acreage increase primarily affects forward contracts, with a time lag in transmission to the spot market.
Downstream, sales of 60S and above high-count yarns remain weak, with mill quotes declining. This should logically force upstream raw material prices down. However, long-staple cotton suppliers, leveraging concentrated inventories and control over quality resources, have successfully resisted demand-side pressure. This 'upstream price support, downstream price suppression' pattern means profits are concentrating at the raw material end, further squeezing spinners' margins.
When Will the Market Standoff Break?
The core contradiction in the long-staple cotton market is clear: cotton enterprises want bulk sales to reduce inventory management costs, while spinners prefer piecemeal purchases to control capital occupation. This structural mismatch keeps the trading market in a 'lukewarm' state—prices are quoted but few deals close, with both sides waiting for the other to blink first.