The average import price of cotton rose 6.2% month-on-month to $1,804/ton in June, while mill purchasing slowed—a paradox signaling deep adjustments on both supply and demand sides.
Volume-Price Divergence Behind High Growth
Customs data shows June imports at 110,000 tons, up 3x YoY but down 2.7% MoM. The YoY surge is largely due to a low base of 27,000 tons last year and a sustained spread of around 3,000 yuan/ton between domestic and international prices. The MoM decline reflects cautious buying during the traditional off-season.
More telling is the price trend. Driven by global new-crop inventory expectations and drought in U.S. cotton regions, average import prices rose from $1,699/ton in May. U.S. cotton led with a 9.2% jump to $2,026/ton, Brazilian cotton rose 3.3% to $1,669/ton, while Australian cotton fell 1.1% to $1,927/ton. This divergence is reshaping sourcing patterns.
Brazilian Cotton Share Plummets, Australian Rises
Sourcing structure shifted dramatically: Brazilian cotton imports fell 32.2% MoM to 44,100 tons, its share dropping from 58% to 40%; Australian cotton surged 22x to 30,600 tons, share jumping from 14% to 28%; U.S. cotton fell 28.1% to 17,900 tons, share at 16%.
Brazilian cotton's decline is directly tied to its price hike eroding cost-effectiveness. For mills with thin margins, every dollar per ton matters. Australian cotton's rise came from stable pricing and consistent quality, offering substitution in premium yarns. U.S. cotton, despite the largest price increase, faces supply uncertainty due to drought, prompting buyers to diversify.
Trade Methods and Demand Signals
Trade method data confirms the chain's flow. Special customs supervision zone logistics remained top at 43,000 tons but fell 4 points in share; general trade rose 12 points to 19%, indicating more direct mill intake. Processing trade accounted for only 9%, reflecting short-run orders.
On the demand side, textile and apparel exports hit $29.27 billion, up 14.3% MoM, with apparel up 21%, signaling autumn/winter replenishment. But domestic off-season buying created a temporary mismatch.
Global Supply-Demand Balance Shifts
USDA July report raised 2026/27 global production by 2.613 million tons, led by Brazil, U.S., Turkey, and Central Asia. Ending stocks-to-use ratio rose to 58.4%, down from 63.1% but still indicating ample supply. ABRAPA data shows Brazil exported 3.219 million tons in the first 11 months of 2025/26, up 18.9%, with China buying 767,000 tons (24% share).
With production up and stocks recovering, upside for import prices is limited. The current high-price window may not last.