Recently, cotton has fluctuated slightly, the operating rate of domestic textile enterprises has been stable and declining, and cotton enterprises are not very motivated to replenish inventory. On the macro level, a package of financial policies such as interest rate cuts and reserve requirement ratio cuts have been introduced in China, providing strong support for the economic market, and the implementation situation needs to be focused on in the future.

According to the commodity market analysis system of SunSirs, as of May 12, the spot price of 3128B grade lint was 14,201 RMB/ton, down 0.06% from the beginning of the month.

Domestic:

Supply side: At present, the cotton sowing work in Xinjiang in 2025 is nearing completion. This year, Xinjiang actively guided various places to take effective measures to promote the adjustment of cotton layout and quality improvement, and the cotton planting area has stabilized at about 36 million mu. Several large cotton growers in Aksu Shaya, Kuche, Xinhe County and other places said that considering that the cotton planting area in Xinjiang will increase again in 2025, if the weather is suitable, the probability of continued growth in output compared with 2024/25 is relatively high.

Domestic commercial inventory destocking is accelerating. As of May 9, 2025, the total cotton inventory is 3.8223 million tons, a decrease of 123,900 tons (a decrease of 3.14%) from the previous week. Among them, Xinjiang's commodity cotton is 2.8845 million tons, a decrease of 127,700 tons (a decrease of 4.24%) from the previous week. The commodity cotton in the mainland is 447,500 tons, an increase of 6,100 tons (an increase of 1.38%) from the previous week.

Demand side: Market transactions have slowed down since May. As of May 8, the operating load of textile enterprises in mainstream regions was 74.4%, which was the same as last week. Due to limited downstream demand, some small and medium-sized textile enterprises have adopted rotation and staggered operation to reduce the inventory of finished products, and the operating rate is basically stable. The downstream market has begun to show off-season characteristics, orders are shrinking, and finished product inventory continues to accumulate under the condition of low yarn transactions.

Export: From January to April 2025, the cumulative export of textiles and clothing was US$90.47 billion, an increase of 1.1%, of which textile exports were US$45.85 billion, an increase of 3.8%, and clothing exports were US$44.62 billion, a decrease of 1.5%. In April, textile and clothing exports were US$24.19 billion, an increase of 1.5%, a month-on-month increase of 3.4%, of which textile exports were US$12.58 billion, an increase of 3.4%, a month-on-month increase of 4.4%, and clothing exports were US$11.61 billion, a decrease of 0.5%, a month-on-month increase of 2.2%.

International:

The overall US cotton price showed a downward trend. As of May 9, the settlement price of the ICE main contract was 66.61 cents, down 2.65% from last Monday. The expected year-on-year decline in the cotton planting area in the United States continued to support cotton prices, but the rainfall in the Texas cotton area in the United States during the week alleviated the drought, and the favorable weather put some pressure on the growth of new cotton. The latest US cotton export data shows that although the shipment momentum of US upland cotton remains strong, the contract volume has decreased significantly month-on-month.

From April 25 to May 1, 2025, the net export contract volume of upland cotton in the United States for 2024/25 was 14,900 tons, a decrease of 39% from the previous week and a decrease of 50% from the average of the previous four weeks. The shipping volume was 89,600 tons, an increase of 8% from the previous week and an increase of 16% from the average of the previous four weeks.

Market Forecast:

The sowing of new cotton has been basically completed, and the sowing area has increased slightly year-on-year. The loose supply side has put pressure on cotton prices. At present, the commercial inventory of the industry is destocking at a fast speed. However, as the off-season deepens, the finished product inventory of the yarn mill accumulates, and the operation of the yarn mill may further weaken the negative cotton price. In terms of macroeconomics, the high-level economic and trade talks between China and the United States were held, and the content of subsequent related meetings may have an impact on the market. If a negotiation is reached on the tariff issue, it may effectively benefit the market.

Follow-up attention will be paid to weather changes in the main cotton producing areas, news of the China-US economic and trade talks, and demand-side conditions.

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