The latest USDA export sales report shows that for the week of July 24-30, US upland cotton net sales for the 2025/26 season were a negative 55,858 bales, down 288% from the previous week and 223% from the four-week average, marking the lowest weekly level of the season. This anomaly does not reflect a real contraction in demand but rather a wave of concentrated cancellations by multiple countries. When global spinners collectively hit the pause button, the seller's market narrative for US cotton is loosening.
Who Is Leaving and Why
Turkey led the cancellations with 33,107 bales, followed by India (9,394), South Korea (4,931), Indonesia (4,243), Vietnam (3,981), Japan (2,989), and Hong Kong (2,376). These countries together account for nearly half of global spinning capacity, so their collective action sends a strong signal. Industry insiders attribute the cancellations to a mismatch between US cotton quality and price. Since mid-May, US cotton entered an oversold state, with remaining low-grade lots failing to meet buyers' requirements for staple length and strength. In a seller's market, buyers tolerated quality discounts, but once substitutes emerged, that tolerance quickly evaporated.
Additionally, Middle East conflicts have escalated shipping risks through the Strait of Hormuz and the Bab el-Mandeb, while freight rates remain high. This prompted some Turkish and Southeast Asian mills to postpone contract performance to the next season rather than bear uncontrollable logistics costs and delivery risks. Essentially, this is a repricing of supply chain resilience.
Competitive Pressure from Australian and Brazilian Cotton
More noteworthy than the cancellations is where buyers are turning. Offerings for Australian cotton (June/July/August shipment) and Brazilian cotton (September/October/November shipment) have increased significantly, with basis levels more competitive than US cotton. At Qingdao port, the basis for Australian SM 1-5/32 (strength 29 GPT) is around 12-12.5 cents/lb against ICE December, while Brazilian M 1-5/32 (strength 28 GPT) is quoted at only 6-6.5 cents/lb. This means Brazilian cotton offers a nearly half-price basis advantage at comparable quality, while Australian cotton appeals with stable quality and flexible shipment schedules. Buyers in Southeast Asia, Turkey, South Korea, and Japan are voting with their feet—when quality differences fail to justify the price gap, procurement decisions inevitably favor better value.
For Chinese textile mills, this shift implies that international cotton pricing is moving from a US-dominated monopoly to a multipolar competition. Future import procurement will no longer passively accept US quotes; instead, buyers can compare Australian, Brazilian, and even West African options. This buyer's market may help lower raw material costs for domestic spinners, but it also demands more sophisticated global sourcing capabilities.
Implications for the Domestic Market
Direct impact on the Chinese market is limited because China's net signings were only 4,136 bales that week, and quota policies remain relatively independent. However, indirect effects are significant. First, weaker demand may pressure international cotton prices, dragging down Zhengzhou futures. Second, increased arrivals of Australian and Brazilian cotton will enrich port spot supplies, alleviating structural shortages. Third, US exporters may lower basis to win back orders, offering opportunities for low-cost replenishment. The deeper takeaway is that global spinning procurement logic has shifted from supply security to cost-effectiveness. The supply anxiety of the past two years is fading, replaced by comprehensive considerations of cost, quality, and logistics stability. For domestic enterprises relying on imported cotton, this is both an opportunity and a challenge—more choices, but requiring more precise forecasting of weather, policies, and exchange rates across origins.