Brazilian Cotton Share Plummets 18 Percentage Points: Import Market Shifts in June

June's cotton import data reveals a key signal: low-cost supply sources are being repriced. Total imports of 110,000 tons rose 3x year-on-year but fell 2.7% month-on-month, reflecting seasonal slowdown rather than demand contraction. The real story is structural: Brazilian cotton's share dropped 18 percentage points, while Australian cotton surged to 28% from near zero.

Import Source Shake-up: Brazil Retreats, Australia Advances

Brazilian cotton imports stood at 44,100 tons, down 32.2% month-on-month. Despite a 6.8x year-on-year increase, its price competitiveness is fading. Average price rose 3.3% to $1,669/ton, while Australian cotton fell 1.1% to $1,927/ton. The price gap narrowed from about $400 in April to $258, but Australia's stable pricing strategy holds more appeal given quality premiums.

US cotton imports fell 28.1% month-on-month, with average price surging 9.2% to $2,026/ton—the steepest increase among major sources. Drought and lower inventory expectations drove up pricing, but downstream mills are showing resistance.

Domestic-Foreign Price Gap Drives Imports, but Mills Turn Cautious

The price gap of around 3,000 RMB/ton remains the core driver of import growth. However, the month-on-month decline in June suggests mills are buying on demand rather than stockpiling. Notably, general trade imports rose 1.4% month-on-month, with share up 12 percentage points to 19%, indicating some mills are directly using imported cotton for production.

Export Recovery Provides Support, but Cost Pass-through Remains a Concern

Textile and apparel exports reached $29.27 billion in June, up 14.3% month-on-month, with apparel exports up 21%, signaling robust autumn/winter restocking. Yarn and grey fabric orders are recovering, supporting cotton consumption. However, average import cotton prices rose 6.2% to $1,804/ton, squeezing mill margins.

Global Supply Outlook Upgrades, Long-term Prices Under Pressure

The USDA July report raised 2026/27 global cotton production by 2.613 million tons, with increases in Brazil, US, Turkey, and Central Asia. Ending stocks rose slightly, pushing the stocks-to-use ratio to 58.4%. Brazil's export data confirms supply pressure: 11-month exports were up 18.9% year-on-year, with June exports surging 63.4%. China remains the largest buyer but its share has fallen to 24%.

Practical Recommendations

For Buyers - Focus on Australian cotton: stable pricing and narrowing price gap with Brazilian cotton make it a cost-effective option. Increase procurement weight appropriately. - Lock in US cotton in batches: volatile due to weather speculation; sign forward contracts on price dips to avoid chasing highs. - Leverage general trade: if production orders are clear, increase general trade imports to reduce intermediate costs from bonded logistics.

For Exporters - Seize autumn/winter order window: export recovery is clear, with apparel exports up 21% month-on-month. Accelerate order intake and lock in raw material costs. - Watch for Brazilian oversupply: production is rising but Chinese purchasing share is falling, potentially leading to price competition. Wait before signing long-term contracts. - Monitor currency fluctuations: rising import prices combined with RMB volatility require margin buffers in quotations.