In June 2026, China imported 110,000 tons of cotton, a three-fold year-on-year increase. However, the more significant story lies in the dramatic restructuring of import origins—Brazilian cotton is rapidly losing ground to Australian cotton, driven by shifting price dynamics and value-for-money considerations.
Import Structure Overhaul: Australian Cotton Emerges as Key Variable
Customs data show that Brazilian cotton imports in June totaled 44,100 tons, down 32.2% month-on-month, with its share plunging from 58% in May to 40%. Meanwhile, Australian cotton imports soared to 30,600 tons, surging 22-fold month-on-month, capturing 28% of total imports compared to just 1.4% in May. US cotton imports stood at 17,900 tons, down 28.1% month-on-month, accounting for 16%.
The direct catalyst for this structural shift is price divergence. The average import price of cotton rose 6.2% month-on-month to $1,804/ton. Brazilian cotton averaged $1,669/ton (up 3.3% month-on-month), US cotton $2,026/ton (up 9.2%), while Australian cotton averaged $1,927/ton (down 1.1% month-on-month). As the price gap between Brazilian and Australian cotton narrows, the latter's cost-effectiveness has become the preferred alternative for mills.
Sustained Domestic-International Price Gap Fuels Import Demand
The fundamental driver behind the surge in import volumes is the persistent price spread of around RMB 3,000/ton between domestic and international cotton, combined with the continued use of sliding-quota tariff quotas. The 2.7% month-on-month decline in June reflects the traditional off-season slowdown in mill procurement. The low base effect from last year—when imports hit a 20-year low of just 27,000 tons due to tariff hikes—amplified the year-on-year growth.
By trade mode, goods under special customs supervision zones remained the largest category at 39%, while general trade rose to 19%, up 12 percentage points month-on-month, indicating a shift toward direct imports by some mills and reinforcing the structural demand for imported cotton.
Overseas Demand Recovery Bolsters Downstream Procurement
June marked the start of autumn/winter apparel restocking overseas, with yarn and gray fabric orders picking up. Textile and apparel exports reached $29.27 billion in June, up 14.3% month-on-month and 7.2% year-on-year. Apparel exports alone hit $15.75 billion, up 21% month-on-month. First-half 2026 exports totaled $145.96 billion, up 1.4% year-on-year. The sustained recovery in overseas demand provides downstream support for cotton imports.
However, caution is warranted as global supply forecasts for the new season have been revised upward. The USDA July report projects a sharp increase of 2.613 million tons in global cotton production for 2026/27, with gains in Brazil, the US, Turkey, and Central Asia, pushing the ending-stock-to-use ratio to 58.4%. This suggests medium- to long-term price pressure, which could test the cost advantage of imported cotton.
Shifting Brazilian Cotton Export Flows: China's Share Declines
According to ABRAPA's July report, Brazilian cotton exports reached 3.219 million tons in the first 11 months of the 2025/26 season, up 18.9% year-on-year. June exports totaled 217,000 tons, up 63.4% year-on-year, but China's share dropped to 24%, with Bangladesh, Turkey, and Pakistan emerging as key incremental markets. Chinese mills are reducing their reliance on Brazilian cotton, and Australian cotton is filling the gap.