The average price of imported cotton hit a new high for the year in June, but the more striking development is the quiet power shift underway in China's cotton import landscape. Brazilian cotton, long the dominant supplier, lost nearly one-fifth of its market share to Australian cotton in a single month.
High Import Volume Driven by Base Effect and Real Pressures
Customs data shows China imported 110,000 tonnes of cotton in June, triple the volume from a year earlier but down 2.7% month-on-month. The year-on-year surge is largely due to an extremely low base in June 2025, when imports hit just 27,000 tonnes—the lowest monthly figure in two decades. Excluding the base effect, first-half cumulative imports of 935,000 tonnes still doubled year-on-year, maintaining a historically high pace.
The core driver remains the wide price gap between domestic and foreign cotton. Industry data shows the spread held steady at around 3,000 yuan per tonne in June, with sliding-scale quota allocations continuing, making imported cotton significantly more cost-effective for Chinese mills. However, June falls in the traditional off-season for domestic textiles, and mill purchasing slowed, leading to the month-on-month decline. If demand fails to recover in the second half, the room for further import growth may narrow.
Brazilian Cotton Stumbles, Australian Cotton Rises: Price vs. Value
The shift in import sources was dramatic. Brazilian cotton still ranked first with 44,100 tonnes, but its volume plunged 32.2% month-on-month, and its share fell from 58% in May to 40%—a loss of 18 percentage points. US cotton also struggled, with imports of 17,900 tonnes, down 28.1% month-on-month, dropping its share to 16%.
In contrast, Australian cotton imports surged to 30,600 tonnes, a 22-fold month-on-month increase, boosting its share from under 1% in May to 28%. The reversal is driven by pricing: Brazilian cotton averaged $1,669/tonne, up 3.3% month-on-month; US cotton averaged $2,026/tonne, up 9.2%; while Australian cotton averaged $1,927/tonne, down 1.1%. Against a backdrop of a 6.2% month-on-month rise in the overall average import price to $1,804/tonne, Australian cotton's price stability precisely met Chinese mills' demand for cost-effectiveness.
For buyers, this means Brazilian cotton's price advantage is eroding. Mills that relied heavily on Brazilian cotton may need to reassess their sourcing mix. Australian cotton offers superior fiber quality and has shown improving supply stability in recent years—its market share surge may signal a long-term trend rather than a short-term blip.
Trade Mode Shift: General Trade Share Rebounds as Signal
By trade mode, goods under special customs supervision zones still led with 43,000 tonnes, but their share fell 4 percentage points to 39%. Goods under bonded supervision zones dropped 12 points to 33%. Notably, general trade imports reached 21,000 tonnes, up 1.4% month-on-month, with its share rising 12 points to 19%.
This shift suggests more imported cotton is moving from 'bonded transit' to 'direct customs clearance' mode. For downstream mills, a rising general trade share signals stronger end-user purchasing intent—companies are using imported cotton directly for production rather than just for inventory or re-export. This aligns with the 14.3% month-on-month rise in textile and apparel exports to $29.27 billion in June, indicating recovering external demand.
Global Supply Outlook Upward, but Structural Tensions Persist
The USDA July report raised the 2026/27 global cotton production forecast by 2.613 million tonnes, with increases in Brazil, the US, Turkey, and Central Asia, pushing the ending stocks-to-use ratio to 58.4%. However, ABRAPA data shows Brazil exported 3.219 million tonnes in the first 11 months of the 2025/26 season, up 18.9% year-on-year, with June exports surging 63.4%. China, Bangladesh, and Turkey together accounted for 53.9% of Brazil's annual exports.
This means despite clear global production growth, Brazil remains heavily dependent on the Chinese market. If Chinese buyers continue shifting to Australian cotton, Brazilian traders will face pressure to diversify export channels. For Chinese mills, diversifying import sources reduces reliance on a single origin, but they must also monitor whether Australian supply can sustain its rapid growth.