Spot prices for extra-long staple (ELS) cotton have staged a surprising rally amid the industry's off-season. In early July, while sales of 60S and above high-count yarns continued to weaken and mill quotes edged down, Xinjiang ELS cotton quotes remained firm, with some ginners even narrowing discounts for regular clients. The tug-of-war between buyers and sellers has shifted from pure price negotiations to a standoff over inventory and timing.
Root of the Supply-Demand Mismatch
The core contradiction in the current ELS cotton market lies in the structural mismatch between concentrated upstream stocks and fragmented downstream buying. On the ginner side, significant volumes of the 2025/26 machine-picked ELS cotton remain in southern Xinjiang bonded warehouses. For instance, one large merchant holds just 11 lots (about 500 tons) in Aksu. These sellers are in no hurry to offload; instead, they prefer mill-sized 'package deals' and show little interest in single-lot purchases.
This hold-sell mentality is backed by data. As of July 8-9, the 2024/25 ELS cotton fixed price in Bazhou, southern Xinjiang, stood at 26,720-26,920 yuan per ton (including one-month truck delivery fee), while the 2025/26 high-strength ELS cotton in Aksu was quoted at 28,220 yuan per ton (including warehouse-in and storage fees). Both were virtually unchanged from late June. With no clear demand recovery, ginners choose to wait for time to work in their favor.
The Ripple Effect of Spinners' 'Light Inventory' Strategy
Downstream mills are playing an entirely different game. Several large-scale spinners in Shandong, Jiangsu, and Henan report that inland ELS cotton inventories are low, concentrated in Zibo, Weifang, and Jiangyin. Facing weak high-count yarn orders and squeezed margins, mills purchase only on a hand-to-mouth basis, keeping raw material stocks at minimal levels.
To adapt, traders now allow buyers to take delivery in half-lot increments—contracts are still signed for full lots, but payment is made per actual withdrawal. This flexibility underscores the 'tepid water' state of ELS cotton trading: prices are firm, but volume is thin. Spinners' light inventory is not just about reducing capital costs; it is also a bet on future price corrections.
The Wildcard from Overseas Supply
A key variable is the USDA's projection for 2026/27 US Pima cotton acreage at 150,000 acres, up 6% year-on-year. This sharply contrasts with the March planting intentions report, which forecast only 130,000 acres (down 8.1%). If US Pima production materializes as expected, it would provide a meaningful supplement to global high-count yarn feedstock and could dampen domestic ELS cotton premiums.
In the near term, however, pricing power remains with Xinjiang ginners. As long as spinners refuse to accept current high quotes and ginners decline to cut prices, the standoff will persist. The stalemate will break only when high-count yarn orders recover or when overseas cotton costs become more competitive.