The average import price of cotton rose 6.2% month-on-month to $1,804 per ton in June, yet imports still surged threefold year-on-year. More notably, the import source structure underwent a dramatic reshuffle—Brazilian cotton's share plummeted from 58% in May to 40%, while Australian cotton's share jumped from 14% to 28%. This shift is the most direct reflection of price signals on procurement decisions.
Price-Driven Procurement Shift
The June price increase was primarily driven by US and Brazilian cotton. US cotton averaged $2,026/ton, up 9.2% month-on-month, while Brazilian cotton rose 3.3% to $1,669/ton. In contrast, Australian cotton fell 1.1% to $1,927/ton. This divergence tilted the cost-performance balance.
For cost-sensitive textile mills, Australian cotton's stable pricing and consistent quality made it a natural substitute for Brazilian cotton. June data shows Australian cotton imports surged 22-fold month-on-month to 30,600 tons, while Brazilian cotton imports fell 32.2% to 44,100 tons. This clear shift reflects the market's 'voting with their wallets' approach.
Off-Season Resilience
Despite the traditional off-season in June, mill purchasing slowed only marginally, with imports down just 2.7% month-on-month. Two key drivers sustained demand: the domestic-foreign price gap remained around 3,000 yuan/ton, keeping imported cotton cost-effective, and the extremely low base from last June (27,000 tons) amplified year-on-year growth. The continued use of additional sliding-duty quotas further supported imports.
Underlying this was recovering external demand. The start of overseas autumn/winter apparel stocking boosted China's textile and apparel exports by 14.3% month-on-month to $29.27 billion in June. Improved orders for yarn and grey fabric directly fueled demand for imported cotton, creating a clear 'exports driving imports' transmission chain.
Trade Mode Shifts Reveal Strategy
Changes in import trade modes also hint at strategic adjustments. General trade imports rose to 19% of total (up 12 percentage points month-on-month), while bonded warehouse imports fell to 33% (down 12 points).
A higher general trade share suggests more companies are using their own quotas to import directly, rather than relying on bonded zones. This typically occurs when firms expect rising prices or face shorter order delivery cycles. The decline in bonded warehouse imports may indicate a preference for faster inventory turnover. Together, these trends suggest textile firms are favoring a 'quick-in, quick-out' procurement model.
Global Supply Outlook
The USDA's July report raised 2026/27 global cotton production by 2.613 million tons, with increases in Brazil, the US, Turkey, and Central Asia. ABRAPA data also shows Brazilian cotton exports grew 18.9% year-on-year in the first 11 months of the 2025/26 season, with June exports up 63.4% year-on-year.
Notably, Brazil's cotton export share to China (24%) is far lower than its global share, indicating Chinese buyers are not the sole destination. As emerging markets like Bangladesh and Turkey increase purchases, Brazil's global pricing power is becoming more dispersed. For Chinese textile firms, this poses both a risk—potentially fiercer bidding—and an opportunity to hedge against single-source price volatility through diversified procurement channels.