Since late August, Zhengzhou cotton futures have oscillated upward, and spot basis quotes and fixed prices in Xinjiang and other warehouses have risen notably. However, the market has not seen the expected boom in buying and selling; instead, it has fallen into a subtle standoff: farmers are holding out for higher prices, while ginners are collectively cautious, even delaying the start of purchases. This mismatch of expectations between upstream and downstream is reshaping the game for the new year's seed cotton procurement.
Background
According to official customs data and industry statistics, the rebound in cotton futures and spot prices in mid-to-late August has further squeezed spinners' immediate profits, weighing on yarn sales. Inland warehouses in Henan, Shandong, Jiangsu, Zhejiang, and Hubei have seen sluggish inquiries and shipments. Large and medium-sized trading firms have tried to stimulate transactions by offering package discounts, lowering basis quotes for origins like Kashgar, Kezhou, and Hami, and allowing batch deliveries, but with limited effect.
Meanwhile, hand-picked cotton prices in southern Xinjiang have kept rising, with purchases mainly through cotton brokers, and only a few ginners with high-priced quilt orders doing trial buying. Farmers have significantly raised their sales expectations for the 2026/27 season, but ginners in Xinjiang generally believe that purchasing, processing, and operational risks are high. This year, financial institutions have been stricter in reviewing cotton procurement credit funds, and it is expected that few ginners will receive credit support before late September.
Industry Impact
This cautious attitude has directly led to a reduction in buying entities. Some ginners in Xinjiang have indicated that due to difficulties in subcontracting or leasing in 2026, coupled with tightened bank credit and increased risks during the procurement period, the number of ginners participating in the new year's seed cotton purchases may drop significantly year-on-year. Although boll opening and harvesting in most cotton areas of Xinjiang have come earlier than last year, a large number of cotton enterprises have chosen to delay opening or stay on the sidelines, disrupting the market supply rhythm.
For farmers, rising transaction prices are positive, but fewer buyers mean narrower channels for actual cash-out, and holding out may translate into concentrated selling pressure later. For textile mills, with high cotton prices and limited yarn price increases, immediate profits are shrinking, forcing them to adopt a hand-to-mouth procurement strategy, further suppressing spot liquidity.
Currently, there are wide disagreements over the extent of yield declines in northern Xinjiang and acreage reductions in southern Xinjiang, making it difficult to form a unified expectation. This implies uncertainty in new-year cotton production, increasing price volatility risk. Ginners' rational risk aversion, in the absence of credit support and clear production signals, may lead them to delay purchases, but it also risks missing the optimal buying window.