In late July, the pace of Xinjiang cotton shipments to inland China slowed markedly. Feedback from major supervised warehouses in Aksu, Kashgar, and Kuytun indicates reduced loading and transportation pressure, especially in northern Xinjiang locations like Shihezi, Changji, and Kuytun. This is not a simple seasonal fluctuation but a composite signal from multiple factors: the launch of state reserve cotton sales, weak domestic demand, and rising production cuts among small and medium-sized textile mills have jointly tightened the liquidity valve of cotton.
Three Forces Behind the Slowing Shipments
The deceleration first points to the start of state reserve cotton auctions. With reserve supplies available, some mills have reduced their immediate spot demand for Xinjiang cotton. Second, the traditional June-July domestic off-season is taking its toll. Many inland small and medium textile mills report insufficient orders, and the share of mills implementing production cuts is rising, particularly in Henan, Shandong, and Jiangsu provinces. Third, the availability of high-grade cotton (e.g., "Double 29, Double 30") in Xinjiang warehouses is shrinking, lowering the willingness to sell. The main destinations for Xinjiang cotton remain Jiangsu, Shandong, Henan, and Hubei, but overall volumes have contracted compared to the first half of the year.
Inventory Structure: Premium Cotton is Getting Scarce
As of around July 20, commercial cotton stocks in Xinjiang were estimated at approximately 1.45 million tons. While not extremely low, the structural issue is critical. The remaining inventory is predominantly from southern Xinjiang regions like Kashgar, Kizilsu, Hotan, and Aksu, while bonded warehouses such as the Western Pearl Bonded Logistics Center mainly hold imported cotton from Kazakhstan, Afghanistan, and Turkey. This means the supply of high-spinnability "Double 29 and above" cotton, which is most needed by mills for high-count and combed yarns, is rapidly depleting. Industry insiders expect more Xinjiang-based textile mills to participate in state reserve cotton auctions in August-September to fill the gap.
Pre-Sale Stalemate: Pricing Game Enters Deep Water
Since July, some large and medium-sized cotton enterprises have started pre-sales for the 2026/27 new crop, with delivery periods spanning October 2026 to January 2027 and price-fixing deadlines set before December 20. The basis pricing structure is clear: 750 yuan/ton for "Double 28", 800 yuan/ton for "28/29 or 29/28", 850 yuan/ton for "Double 29", 900 yuan/ton for "29/30 or 30/29", and 950 yuan/ton for "Double 30 and above." However, inquiries from Xinjiang mills and traders remain tepid, with few showing interest in locking in basis or pre-purchasing anytime soon.
- Mills' concerns are practical: current reserve cotton and high-grade, low-basis spot supplies from the 2025/26 crop are still attractive, so there is little incentive to lock in costs for uncertain future supplies.
- Cotton enterprises hope to secure some profits through pre-sales, but the downstream's cold reception suggests the market is not optimistic about forward prices.
- This means the window before the new crop arrives is a waiting game: both sides are expecting the other to show their hand first.
Implications for the Supply Chain
The slowdown in shipments and the pre-sale struggle share the same root cause: insufficient downstream demand to support strong cotton prices. For textile mills, procurement strategies need to be more flexible. Reserve cotton auctions are likely the most reliable source for the next two to three months, but auction prices and volumes require real-time monitoring. For ginners and traders, the cold pre-sale market signals higher risks in the upcoming harvest season. If seed cotton purchase prices in September-October fail to align with downstream expectations, mills could face the classic problem of "buying in but unable to sell out."