In early July, the Xinjiang long-staple cotton market presented a rare paradox: prices remained stubbornly firm while trading volumes were tepid. Even as demand for high-count yarns (60S and above) weakened and mill prices kept slipping, upstream cotton prices held steady, with some ginners even narrowing discounts for long-time customers. This signals a deep-seated standoff over inventory strategies and price expectations between upstream and downstream players.
A Mismatch in Supply-Demand Expectations
On the supply side, ginners' reluctance to sell is the first line of defense propping up prices. According to industry data, the fixed price for the 2024/25 crop in Bazhou, southern Xinjiang, stood at CNY 26,720-26,920 per ton, while higher-grade 2025/26 crop in Aksu was quoted at CNY 28,220 per ton—virtually unchanged from late June. A major cotton trader revealed that its remaining 11 batches of machine-picked long-staple cotton are not for piecemeal sale; it is instead seeking a single bulk buyer among larger textile mills. This disdain for small-lot orders reflects suppliers' relative optimism about future prices.
However, demand tells a different story. Mills in Shandong, Jiangsu, and Henan reported insufficient orders for high-count yarns, forcing them to purchase only on a need-to basis. These mills are strictly adhering to a "lean inventory" strategy, shortening procurement cycles and reducing single-order volumes. To facilitate sales, traders have even had to allow "half-lot" withdrawals—where a buyer signs a contract for a full batch but pays only for the portion taken each time. This practice, uncommon in stronger markets, is a clear sign of buyers gaining leverage.
The Disconnect Between External Variables and Internal Logic
An external variable worth noting is the USDA's forecast for 2026/27 US Pima cotton acreage, expected to reach 150,000 acres, up 6% year-on-year. This would normally pressure domestic long-staple cotton prices, as Pima is a direct competitor. Yet the domestic market has shrugged it off. The reason is that current pricing is driven more by regional inventory structures and holding costs than by distant international planting expectations. Ginners in Xinjiang generally have high holding costs, and combined with uncertainty over local production in 2026/27, they are unwilling to compromise on price.
This "cold outside, hot inside" dynamic has left the long-staple cotton spot market in a "lukewarm" state—prices not falling, but transactions not picking up. For buyers, this is both a trial and a potential opportunity. If the off-season persists and mill cash flow tightens further, the lean inventory strategy could escalate into outright destocking. In that scenario, even the most stubborn ginner would be forced to lower prices.