The circulation of Xinjiang cotton is undergoing a quiet adjustment. In late July, feedback from supervised warehouses in Aksu, Kashgar, and Kuitun indicated a notable slowdown in shipments of Xinjiang cotton to inland regions, with reduced pressure on loading and transportation. This shift is particularly evident in northern Xinjiang locations such as Shihezi, Changji, and Kuitun. The slowdown is not driven by a single factor but results from multiple market forces.
Deeper Logic Behind Slowing Shipments
The deceleration is directly linked to the launch of central reserve cotton sales. As reserve cotton enters the market, some inland textile mills have shifted to bidding for resources, reducing direct demand from Xinjiang. Concurrently, the domestic market's off-season from June to July has become more pronounced, with weakening terminal orders transmitting to midstream operations. The proportion of small and medium-sized mills implementing production cuts or suspensions has continued to rise, dampening immediate raw material procurement. Additionally, the supply of high-grade cotton varieties—such as "double 29," "double 30," and "double 31"—in Xinjiang warehouses is tightening, further curbing shipment enthusiasm. In July, primary destinations for Xinjiang cotton remained Jiangsu, Shandong, Henan, and Hubei provinces, but overall volumes had declined versus previous months.
Inventory Structure Reveals Supply Concerns
Based on surveys and estimates among Xinjiang cotton enterprises, commercial stocks in the region had fallen to approximately 1.45 million metric tons by July 20. Notably, the composition of remaining stocks is uneven—resources from southern Xinjiang (Kashgar, Kezhou, Hotan, Aksu) account for a disproportionate share, while high-grade northern Xinjiang cotton is relatively scarce. Meanwhile, bonded warehouse inventories in Xinjiang are dominated by imported cotton from Kazakhstan, Afghanistan, and Turkey, offering limited supplementation for domestic high-grade needs. This implies that during the traditional "green and yellow" period from August to September, Xinjiang textile mills will face more severe pressure to replenish high-specification cotton. It is foreseeable that more Xinjiang mills will participate in the 2026 central reserve cotton auctions to secure "double 29" and "double 30" resources with high spinnability, ensuring production continuity.
Pre-sale Stagnation: Rational Wait-and-See by Mills
Since July, some large and medium-sized cotton enterprises have initiated pre-sales for the 2026/27 new crop, with delivery periods set from October 2026 to January 2027 (seller's option) and pricing deadlines by December 20. Basis quotations are clearly structured: 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" or above. However, Xinjiang mills and traders have shown little enthusiasm for these pre-sales, with no immediate plans to lock in basis or pre-purchase.
This cautious stance reflects mills' uncertainty about future price trends. Currently, mills' replenishment focus remains on reserve cotton and 2025/26 high-specification, low-basis spot cotton, which offer more immediate cost competitiveness. While pre-sales provide forward price-locking opportunities, current basis levels lack clear appeal in the present market environment. Coupled with unclear recovery in downstream demand, mills prefer to maintain cash flow flexibility rather than lock in long-term costs prematurely.
Upstream-Downstream Transmission and Price Expectations
The slowing shipments and pre-sale stagnation essentially reflect divergent expectations across the entire chain—from upstream planting to downstream weaving. For upstream ginners and traders, high inventories combined with scarce high-quality resources suggest potential price support later, but hampered shipments limit their ability to command premiums in inland markets. For midstream textile mills, production cuts have led to conservative procurement strategies, prioritizing spot and reserve cotton for cost efficiency. For downstream apparel and home textile makers, the persistent domestic off-season means terminal demand has yet to provide effective pull, failing to transmit positive signals upstream.
Looking ahead, August and September will be critical. If reserve auction activity remains robust and Xinjiang shipments fail to recover, high-grade cotton spot prices may find support. Conversely, if downstream demand fails to materialize during the traditional peak "Golden September and Silver October" season, resistance to new crop pre-sales will intensify, leaving room for basis reductions.