In late July, the transfer of Xinjiang cotton to inland China slowed markedly, with reduced pressure on warehouse loading and dispatch. Feedback from regulatory warehouses in Aksu, Kashgar, and Kuytun indicates that this trend is most pronounced in northern Xinjiang locations such as Shihezi, Changji, and Kuytun. Industry insiders attribute the slowdown to a combination of four factors: the launch of central reserve cotton sales, the deepening of the domestic off-season, rising production cuts among small and medium-sized textile mills, and the tightening supply of high-quality, high-grade cotton within Xinjiang.
Slowdown in Transfer: Market Signals Under Four Pressures
As of July 20, commercial cotton inventory in Xinjiang is estimated to have fallen to about 1.45 million tons, with a notable shift in composition: resources from southern Xinjiang (Kashgar, Kizilsu, Hotan, Aksu) now account for a growing share, while the availability of high-index cotton from northern Xinjiang continues to shrink. Meanwhile, inventory in bonded warehouses within Xinjiang—primarily from Kazakhstan, Afghanistan, and Turkey—is also increasing, further reducing the urgency of transferring Xinjiang cotton inland.
- Reserve cotton sales: The central reserve's release has diverted demand from inland mills, lowering their need for immediate Xinjiang spot purchases.
- Domestic off-season: The traditional June-July lull in textile demand has slowed raw material procurement.
- Mill production cuts: Rising production cuts among small and medium-sized mills due to shrinking margins and weak orders have reduced spot demand.
- Tight high-grade supply: High-index "double 29/30/31" cotton is increasingly scarce, concentrated in southern Xinjiang.
In July, the primary destinations for Xinjiang cotton remained Jiangsu, Shandong, Henan, and Hubei, but overall transfer volumes were significantly lower than in the first half of the year. It is expected that in August-September, more Xinjiang-based textile mills will participate in central reserve cotton auctions to secure high-spinnability resources and navigate the supply gap.
Pre-Sales for New Crop: Tepid Response to Basis Pricing
Since July, some large and medium-sized cotton enterprises have launched pre-sales for the 2026/27 crop, with delivery windows from October 2026 to January 2027 (seller's option) and a pricing period before December 20. The basis pricing structure is as follows:
- "Double 28" basis: RMB 750/ton
- "28/29 or 29/28" basis: RMB 800/ton
- "Double 29" basis: RMB 850/ton
- "29/30 or 30/29" basis: RMB 900/ton
- "Double 30" and above basis: RMB 950/ton
However, this pricing has failed to ignite downstream buying interest. Most mills and traders in Xinjiang are showing little enthusiasm for inquiry, with no near-term plans to lock in basis or pre-purchase. Their focus remains on reserve cotton and 2025/26 high-index, low-basis Xinjiang spot.
This tepid response reflects downstream caution about future price trends: reserve cotton prices are relatively stable, providing an alternative spot source, while the new-crop basis offers no significant discount compared to current spot levels, giving buyers little incentive to lock in early. With domestic orders yet to recover and export uncertainties persisting, mills prefer to maintain low inventory and adopt a hand-to-mouth procurement strategy.
Industry Impact and Outlook
The slowdown in transfer and the cold reception to pre-sales point to a core contradiction: short-term supply (reserve + old crop) is relatively ample, but medium- to long-term supply of high-quality resources (new crop + high-grade cotton) faces a structural gap. For textile mills, this means:
- August-September is a critical window: if reserve auctions continue at pace, spot prices may remain stable; if reserve supply slows or quality fails to meet high-count yarn requirements, premiums for high-grade cotton could rise again.
- The tepid pre-sales may force cotton enterprises to adjust basis quotes in August-September to attract early lock-in, potentially offering mills a favorable buying opportunity.
- The rising share of southern Xinjiang inventory may increase outbound logistics costs due to dispersed origins; inland mills should plan procurement radii and transport schedules in advance.