The long-staple cotton market is at a delicate balance: prices are tentatively rising, but transactions have yet to gain momentum. According to public industry data, 2025/26 grade 336/337 long-staple cotton in southern Xinjiang warehouses is now offered at 27,800-28,200 yuan/ton, up 100-300 yuan/ton from earlier levels. This adjustment is not demand-driven but rather an upstream reaction to expectations of high seed cotton purchase prices, with a strong tone of testing downstream acceptance.
Background
From an inventory perspective, supply pressure has not eased. A ginner in Awati reported that as of end-August, about 350 tons of 2025/26 long-staple cotton remained unsold, mainly low-grade with staple length below 36mm and breaking strength of 39-41 cN/tex. Such lots offer greater room for negotiation, and mills or traders can bargain on package deals. Meanwhile, to accelerate clearance, some firms are offering 2023/24 grade 336 at 24,000-24,200 yuan/ton, showing a significant discount to new crop, reflecting urgency in destocking.
Notably, the price gap between old and new crops has widened to nearly 4,000 yuan/ton, which not only reflects quality differentials but also implies accumulated carrying costs and financial pressure. For buyers, the current low-priced old crop presents a window of opportunity, but quality matching risks must be carefully assessed.
Industry Impact
Credit tightening is emerging as the biggest variable for the new season. Ginners in Bazhou and Aksu report that financial institutions have notably tightened credit support for 2026/27 cotton purchases, with reduced quotas and higher requirements for self-funded capital and loan margins. This means ginners must accelerate sales of old cotton and recover funds, or they will directly impact cash flow for new-season seed cotton procurement and processing.
This shift will have dual effects: in the short term, some ginners may be forced to cut prices to sell, capping spot price upside; in the long run, weaker ginners may exit the market, raising industry concentration and altering pricing power in seed cotton. Mills should monitor supplier financial health to avoid default risks.
On the demand side, there are bright spots. As the traditional peak season of "Golden September and Silver October" approaches, orders for home textiles, high-end underwear, baby clothing, and 2027 spring/summer mid-to-high-end shirts and T-shirts are being released. Xinjiang mills' capacity for C60s and above high-count yarns continues to grow, supporting positive long-staple consumption expectations. However, whether demand recovery can offset supply-side disruptions from credit tightening remains to be seen after October's actual order data.