June 2026 witnessed a dramatic reshuffling of China's imported cotton supply: Brazilian cotton arrivals plunged 32.2% MoM, its share dropping from 58% to 40%, while Australian cotton surged 22x MoM to claim 28% of the market. This shift is not a seasonal anomaly but a rational response to diverging price competitiveness.
Price Gap Drives Procurement Switch
Customs data show average import prices rose 6.2% MoM to $1,804/ton, led by US cotton (+9.2% to $2,026/ton) and Brazilian cotton (+3.3% to $1,669/ton). Australian cotton prices edged down 1.1% to $1,927/ton, enhancing its appeal.
The domestic-foreign price spread remains high at around RMB 3,000/ton, but divergence within imported cotton is reshaping mill buying decisions. Brazilian cotton, once the go-to for its cost advantage, now faces reduced demand as prices rise. Mills are voting with their wallets, favoring Australian cotton for stable quality and moderate pricing.
Structural Signals Amid Volume Growth
June imports totaled 110,000 tons, up 3x YoY but down 2.7% MoM. First-half cumulative imports reached 935,000 tons, doubling YoY. The YoY surge reflects a low base last year and continued use of sliding-duty quotas. The MoM decline, however, signals mills are pacing purchases during the traditional off-season.
Notably, general trade imports rose from 7% to 19% of the total, suggesting some firms are shifting away from bonded or special customs warehouse models, preferring more flexible direct import strategies amid uncertain price outlooks.
Global Supply Expectations Stir Sentiment
USDA's July report projects 2026/27 global cotton output up 2.613 million tons, with Brazil, the US, and Turkey increasing production. Ending stocks-to-use ratio rises to 58.4%. Yet 2025/26 stocks are revised down 1.96 million tons, with the consumption ratio falling to 63.1%. This contradictory data fuels dual expectations of supply abundance and inventory tightness.
Brazil's export data confirm the trend: June exports grew 63.4% YoY. China remains the top buyer but its share is declining as Bangladesh and Turkey increase purchases, signaling diversification in global cotton trade flows.
Export Recovery Supports Demand, but Costs Loom
June textile and apparel exports reached $29.27 billion, up 14.3% MoM and 7.2% YoY. Apparel exports alone rose 21% MoM, reflecting autumn/winter order replenishment. Yarn and grey fabric orders are picking up, supporting cotton demand.
However, a 6.2% rise in import cotton prices means higher raw material costs for mills. If the price gap between Australian and Brazilian cotton persists, mills will need to balance quality and cost carefully. Smaller mills, more price-sensitive, may accelerate the shift to Australian or domestic cotton.