While China's total cotton imports tripled year-on-year in June 2026, a silent structural reshuffle was underway beneath the surface. The country imported 110,000 tons of cotton, down only 2.7% month-on-month, but the performance of Brazilian and Australian cotton showed a stark contrast: Brazilian cotton's import share plummeted from 58% to 40%, while Australian cotton surged from a negligible share to 28%. This shift reflects the direct impact of diverging international cotton prices and a rational vote on cost-effectiveness by the global textile supply chain.
Price Divergence Drives Structural Change
The average import price of cotton rose 6.2% month-on-month to $1,804 per ton in June, but price increases varied significantly by origin. US cotton led the rally at $2,026/ton, up 9.2% month-on-month, followed by Brazilian cotton at $1,669/ton, up 3.3%. In contrast, Australian cotton averaged $1,927/ton, down 1.1% month-on-month. This price divergence directly reshaped the cost-effectiveness ranking among origins.
For textile mills, cost sensitivity is the core driver of procurement decisions. After months of maintaining a price advantage, Brazilian cotton's modest increase in June was enough to divert some orders to the more stable Australian cotton. More critically, Australian cotton has long enjoyed a reputation for consistent quality, and when the price gap narrows to a reasonable range, its substitution effect quickly materializes.
Industrial Transmission: From Import Structure to End-Use Orders
The import structure shift is not an isolated event. In June, China's textile and apparel exports grew 14.3% month-on-month to $29.27 billion, as overseas autumn/winter apparel orders kicked off, reviving demand for yarn and grey fabric. This demand-side change placed higher requirements on cotton quality and delivery timelines. Australian cotton arrivals surged 22 times month-on-month to 30,600 tons, reflecting concentrated replenishment of mid-to-high-end yarn raw materials downstream.
Notably, Brazilian cotton did not benefit from the overall demand recovery. Its import volume fell 32.2% month-on-month, and despite a 6.8-fold year-on-year increase, the sharp monthly decline indicates that Brazilian cotton has lost ground to Australian cotton in the battle for incremental orders. A similar pattern occurred with US cotton, whose imports fell 28.1% month-on-month, with its share dropping 6 percentage points. Among these three traditional heavyweights, only Australian cotton achieved a counter-cyclical expansion in market share.
Trade Mode Changes Reveal Shifting Procurement Strategies
In terms of trade modes, goods under special customs supervision areas still ranked first at 43,000 tons, but their share fell 4 percentage points to 39%. General trade imports reached 21,000 tons, up 1.4% month-on-month, with its share rising 12 percentage points to 19%. This shift suggests that more cotton imports are moving from bonded circulation to direct production use. A rising share of general trade is often linked to the certainty of end-use orders — when factories have confirmed orders, they prefer direct imports with tariff payment rather than using bonded zones for inventory buffering.
The share of processing trade also rose slightly to 9%, further confirming a return to 'order-driven' procurement. This forms a closed loop with the strong export performance in June: recovering overseas demand generated orders, orders triggered raw material procurement, and procurement behavior in turn influenced trade modes and origin choices.
Global Supply Outlook: Production Increases Amid Inventory Pressure
The USDA July report shows that global cotton production for 2026/27 is expected to increase by 2.613 million tons, with Brazil, the US, Turkey, and Central Asia all planning expansions. Ending stocks are slightly higher, pushing the stock-to-use ratio to 58.4%. This means that even with short-term structural adjustments in imports, the long-term global cotton supply remains loose.
Data from the Brazilian Cotton Growers Association (ABRAPA) corroborates this: in the first 11 months of the 2025/26 season, Brazil exported 3.219 million tons of cotton, up 18.9% year-on-year. While China remained the largest buyer of Brazilian cotton (accumulated 767,000 tons), its June purchases accounted for only about 20% of Brazil's monthly exports, well below its full-year share of 24%. This indicates that Chinese buyers significantly reduced their Brazilian cotton procurement in June, while markets like Bangladesh and Turkey are filling the gap.