As port cotton stocks quietly approach 620,000 tons, the market presents a peculiar calm—domestic-foreign basis remains rock-solid, yet a pattern of hot-and-cold trading is forming.
Rising Inventory, Stable Basis
According to industry public data, as of July 25, total cotton stocks at China's major ports rebounded to 610,000-620,000 tons. This figure represents a significant increase from mid-July, primarily driven by the continued arrival of 2025/26 Australian cotton, alongside steady inflows of Brazilian, US, and Turkish cottons.
Notably, over the past week, both FOB/CNF/CIF quotes and RMB spot sales basis for cleared imported cotton have shown no significant fluctuations. This phenomenon indicates a fragile balance between supply and demand—sellers are reluctant to cut prices, while buyers await clearer signals.
Looking at specific quotes, the basis for cleared Brazilian cotton M 1-5/32 (strength 28-30 GPT) at Qingdao port remained in the 1,850-2,120 yuan/ton range, while Mexican cotton SM 1-1/8 (strength 29 GPT) was around 1,800-1,850 yuan/ton. For Kazakh cotton SLM "Double 28" at Xinjiang West Pearl warehouse, the basis diverged by micronaire: 700 yuan/ton for 4.3-4.9, and only 300 yuan/ton for 4.5-5.2. The same logic applies to Afghan cotton.
Diverging Trading Activity
Despite rising total inventory, trading activity varies sharply by origin. 2025/26 bonded and August-September shipment Australian cotton has become the market darling, with mills and intermediaries actively inquiring and purchasing. In contrast, spot trading for Brazilian, US, Kazakh, and West African cottons has slowed significantly compared to early-to-mid July.
This divergence carries at least three implications. First, Australian cotton remains irreplaceable for current mill order structures due to its stable quality and spinnability. Second, tightening import quotas force quota holders to prioritize high-value or high-cost-performance cottons over bulk accumulation. Third, central reserve sales launched on July 20 directly substitute for domestic and low-end imported cottons.
For buyers, this means that under the same basis conditions, actual landed costs across origins may diverge more. Spinners requiring specific micronaire and strength parameters face a narrowing pool of viable imported options.
Quota Tightening and Policy Variables
The gradual tightening of second-half 2026 cotton import quotas is a key variable shaping current market direction. As reserve sales accelerate, some mills reliant on imports are pivoting to state reserve auctions, directly suppressing port cotton liquidity.
From the inventory structure, Brazilian, Australian, US, Turkish, Kazakh, West African, and Indian cottons rank high at ports, but destocking speeds vary significantly. If Australian cotton's active trading persists, high-grade port inventories will decline first; conversely, if quotas tighten further, bulk grades like Brazilian and US may face mounting stock pressure.