The average price of imported cotton climbed to $1,804 per ton, yet Chinese textile mills did not slow their purchasing—June imports surged threefold year-on-year, driven by a persistent domestic-international price gap of around 3,000 yuan per ton and an ultra-low base from last year's tariff impact. However, month-on-month data reveals a subtler signal: imports fell 2.7%, confirming the seasonal slowdown typical of the textile industry's off-season.
Supply Landscape in Flux: Australian Cotton's Surge
The shift in import sources carries greater industry impact than the total volume change. Brazilian cotton, with prices up 3.3% month-on-month to $1,669 per ton, lost its cost advantage, with imports plunging 32.2% and its share dropping 18 percentage points to 40%. In stark contrast, Australian cotton, with prices edging down 1.1% to $1,927 per ton, saw imports skyrocket 22 times month-on-month, boosting its share from 14% to 28%. U.S. cotton also faced pressure, with prices rising 9.2% to $2,026 per ton and imports falling 28.1%, reducing its share to 16%.
This structural shift signals that Brazilian cotton's cost-effectiveness window is closing. While it dominated market share in recent years due to price advantages, its current price gains now exceed those of Australian cotton, which offers greater supply stability and consistent quality. For mills dependent on specific cotton types, this directly impacts blending costs and yarn quality consistency.
Trade Modes and Exports: Warmth in the Off-Season
In June, goods under special customs supervision zones remained the largest import category at 43,000 tons, though its share edged down. General trade rose 12 percentage points to 19%, reflecting more direct purchases for production. The share of goods in bonded supervision zones fell 12 percentage points, possibly due to mills adjusting inventory strategies—reducing bonded stockpiling amid high prices and buying on demand.
Export data offered a boost: textile and apparel exports reached $29.27 billion in June, up 14.3% month-on-month, with apparel exports up 21%, indicating real recovery in overseas autumn/winter stocking. Yarn and grey fabric orders improved, potentially easing destocking pressure for upstream cotton mills. However, cumulative exports for January-June grew only 1.4%, suggesting uneven external demand recovery, with June's surge likely driven by seasonal order concentration.
Global Supply Outlook: Production vs. Inventory
The USDA's July report projects 2026/27 global cotton output up 2.613 million tons, with increases in Brazil, the U.S., Turkey, and Central Asia. However, lower beginning stocks and only a slight rise in ending stocks keep the stock-to-use ratio at 58.4%, still manageable. ABRAPA data shows Brazil exported 3.219 million tons in the first 11 months of the 2025/26 season, up 18.9% year-on-year, with China purchasing 767,000 tons (24%). This suggests Brazilian cotton's global supply capacity remains strong, and China's short-term share decline is price-driven, not supply-driven.
For mills, current high import prices combined with a rising stock-to-use ratio suggest cotton prices may enter a high-range consolidation in H2. Australian cotton's rising share offers a new pricing anchor, but buyers must watch if supply can sustain growing demand.