In July 2026, ginning mills across Xinjiang's cotton regions are undergoing a quiet but profound capacity upgrade. Unlike previous years, this season's equipment maintenance goes beyond routine servicing, targeting the systematic replacement of aging dust collectors, ginning machines, and lint cleaners. Mills in major production areas such as Aksu, Kashgar, and Changji have explicitly stated that they will link seed cotton purchase standards for the 2026/27 season to lint processing quality, aiming to reduce impurity and foreign fiber content to historic lows. Behind this move lies a collective bet on the 'premium cotton, premium price' strategy—using higher processing precision to secure a premium for lint rather than merely pursuing processing volume.
Supply-Demand Balance: Dual Pressure from Reserve and Imported Cotton
From the supply side, the domestic cotton market is not short of supply before the 2026/27 new crop arrives. According to China Customs data, cotton imports from January to May 2026 surged 91.06% year-on-year, nearly doubling from the same period last year. Meanwhile, central reserve cotton sales began in July, which will be the most important replenishment channel for textile mills over the next three months. More critically, as of end-June, commercial cotton inventories nationwide and in Xinjiang remained higher than the same period last year. This means that even if the new crop faces a phased reduction due to weather or acreage changes, the market has sufficient buffer.
For ginning mills, this supply landscape directly weakens the momentum for bulls to drive up Zhengzhou Cotton futures and consequently raise seed cotton purchase prices. A medium-sized mill operator in Shaya, Aksu, said frankly that under the dual supply pressure of reserve and imported cotton, the probability of a tight supply situation before the 2026/27 new crop hits the market is low. In other words, mills face not a 'battle for cotton' during the buying season, but a challenge to control costs and avoid buying at inflated prices.
Cottonseed Price Anomaly: The Only Upward Support
However, not all factors favor price suppression. The cottonseed market is currently showing a stable-to-firm trend. Persistent drought in the main U.S. soybean-producing regions has driven a rebound in protein meal prices such as soybean meal and cottonseed meal; increased purchasing demand from oil mills in North China and Xinjiang; coupled with fewer trucks leaving Xinjiang and rising freight costs, have collectively pushed up cottonseed prices. Since cottonseed is an important by-product revenue source for ginning mills, its price strength has to some extent improved mills' profit expectations, thereby providing support for higher seed cotton purchase prices.
But the sustainability of this support is questionable. Cottonseed prices are highly volatile, influenced by international soybean weather markets. Once rainfall improves in the U.S., cottonseed prices could quickly retreat. By then, if mills have already purchased seed cotton at high prices, they will face the risk of both lint and cottonseed prices declining.
Purchase Price Game: The 7.0 Yuan/kg Watershed
Currently, individual farmers and large cotton growers in Xinjiang have raised their expected selling price for 2026/27 seed cotton to 7.5 yuan/kg or above. However, most ginning mills are far more cautious, generally believing that an opening price above 7.0 yuan/kg is already high, and the 7.0-7.5 yuan/kg range poses significant risk for mills.
The core of this divergence lies in profit distribution. Farmers, based on the relatively good returns of the 2025/26 season, hope to continue high prices; mills, on the other hand, see the reality of ample supply and weak demand. Historically, when there is a significant gap between mills and farmers on the opening price, the buying season often sees a 'high open, low walk' or 'stalemate tug-of-war' pattern. Given that many mills have increased equipment investment this year, their financial pressure is greater, leaving limited room for voluntary concessions.