In June 2026, China imported 110,000 tons of cotton, a threefold year-on-year surge but a 2.7% month-on-month decline. This contrast stems from a persistent high price spread of around 3,000 yuan per ton between domestic and international markets, combined with an extremely low base last year (27,000 tons). More notably, the import source structure is undergoing a dramatic reshuffle: Brazilian cotton's share dropped 18 percentage points from its peak, while Australian cotton surged 22 times month-on-month to claim 28% of the market.
Price Spread and Procurement Rhythm Divergence
The core driver behind the import surge is the domestic-international price spread. The continued use of sliding-scale quota tariffs keeps imported cotton attractive to Chinese mills. However, June falls in the traditional off-season for domestic textiles, slowing mill procurement and causing the month-on-month decline. This indicates that import growth is not a sign of full demand recovery but a result of policy windows and arbitrage opportunities.
The average import price rose to $1,804 per ton, up 6.2% month-on-month, driven by global new-crop inventory decline expectations and drought in U.S. cotton regions. U.S. cotton averaged $2,026/ton (up 9.2%), Brazilian cotton $1,669/ton (up 3.3%), and Australian cotton $1,927/ton (down 1.1%). Price divergence directly reshaped the import source structure.
Australian Cotton's Rise, Brazilian Cotton's Waning Cost-Effectiveness
June saw rare shifts in import source rankings. Brazilian cotton remained top but imports fell 32.2% month-on-month to 44,100 tons, with its share dropping 18 percentage points to 40%. U.S. cotton imports fell 28.1% to 17,900 tons, with a 6-percentage-point share decline to 16%. Australian cotton imports surged 22 times to 30,600 tons, pushing its share from about 1% to 28%, a 98-percentage-point month-on-month increase.
The direct cause is price. Brazilian cotton rose 3.3%, reducing its cost advantage; U.S. cotton rose even more at 9.2%; while Australian cotton edged down 1.1%, attracting buyers. From an industry perspective, mills in the off-season favor cost-effective sources, and the Australian cotton surge reflects this logic.
Trade Mode and Export Linkage Signals
In trade modes, goods under special customs supervision zones remained top but edged down in share; general trade rose to 19%, up 12 percentage points, indicating more imported cotton entering domestic circulation directly. Bonded warehouse goods fell 12 percentage points, suggesting reduced re-export activity.
Export data provides support. June textile and apparel exports reached $29.27 billion, up 14.3% month-on-month and 7.2% year-on-year. Overseas autumn-winter apparel restocking boosted yarn and fabric orders, with garment exports up 21% month-on-month. January-June cumulative exports were $145.96 billion, up 1.4%. Export growth underpins import demand, but off-season effects still suppress short-term procurement.
Global Supply Outlook and Price Expectations
The USDA July report shows 2026/27 global cotton production up 2.613 million tons, with increases in Brazil, the U.S., Turkey, and Central Asia. Ending stocks rose slightly, pushing the stocks-to-use ratio to 58.4%. For 2025/26, production was revised down, ending stocks fell 1.96 million tons, and the ratio dropped to 63.1%. The new season's looser supply outlook may pressure forward prices.
Brazilian Cotton Growers Association data shows Brazil exported 3.219 million tons in the first 11 months of 2025/26, up 18.9% year-on-year. China bought 767,000 tons, 24% of Brazil's total, remaining the top buyer. But June's decline in Brazilian cotton's share to China highlights intensifying competition with Australian cotton.