The long-staple cotton market is at a delicate equilibrium: spot prices have stabilized after a period of decline, but trading volumes remain thin. According to industry surveys, quotes for 2023/24 to 2025/26 crop long-staple cotton in Xinjiang warehouses have flattened over the past week, with only a few mills holding low inventories and ample cash flow raising asking prices by 50-150 CNY/ton. This price signal reflects a psychological standoff between sellers unwilling to cut prices and buyers sticking to just-in-time procurement.
Price Stabilization: Support and Resistance
Specific quotes from a major cotton company on August 13-14 show 2023/24 crop grade 336 (strength 39-41 cN/tex, trash 2.0-2.7%) at a fixed price of 24,200 CNY/ton, while 2025/26 crop same grade (strength 39-40 cN/tex, trash 2.8-3.3%) was offered at 28,000 CNY/ton—a spread of 3,800 CNY/ton. This gap far exceeds typical storage and financing costs, reflecting sellers' premium expectations for the new crop. However, downstream spinners and traders have not chased prices, only replenishing on a need basis, indicating that end demand has not yet shown a trend reversal.
Notably, ginners in Awat, Kuqa, and Shaya still hold considerable 2025/26 crop long-staple cotton, mainly stored in Bazhou and Aksu supervised warehouses. The pace of destocking will directly influence future price movements. If peak-season demand disappoints, high inventories may force ginners to cut prices before year-end; conversely, if high-count yarn orders pick up, current levels could mark a temporary bottom.
Changing Sales Models: Defensive Strategies
In response to weak demand, cotton companies are actively adjusting sales tactics. The most obvious change is allowing buyers to take delivery in half-lots, especially in inland consumption areas like Henan, Shandong, Jiangsu, and Zhejiang, with payment settled in installments. Some contracts even offer 1-3 month credit terms or banker's acceptance bills. This flexibility lowers the financial threshold for buyers, essentially trading away financing costs to secure deals without cutting prices.
A deeper signal is that mills generally plan to extend sales of old-crop cotton until around the Spring Festival of 2027. This indicates acceptance of a slower sales pace and reluctance to clear inventories before the peak season. This mindset shift stems partly from the impact of sustained high temperatures and drought in July-August on long-staple cotton growth—quality uncertainty for the new crop may increase the scarcity value of old-crop cotton. Additionally, the traditional 'golden September and silver October' peak season is approaching, and domestic high-count carded and combed yarn prices are stable with rising volumes, giving mills confidence to hold prices.
Transmission and Expectations Across the Chain
The stabilization of long-staple cotton prices carries different implications for upstream ginners and downstream spinners. For ginners, extending sales cycles means increased capital occupation; if cash flow is tight, this strategy may become unsustainable. For spinners, purchasing high-grade long-staple cotton at current levels locks in raw material costs but also exposes them to future price volatility. Given the tight supply before the new crop arrives and weather risks that could further reduce quality cotton supply, downstream players may be prudent to build moderate inventories.
From a broader perspective, the stabilization also reflects the rigid demand for high-quality raw materials in the domestic cotton industry. Even amid generally weak demand, steady shipments of high-count yarn provide a floor for long-staple cotton prices. In the coming months, close attention should be paid to weather impacts on the new crop, reserve cotton rotation policies, and actual order placements downstream.