Price trend

The actual planting area of domestic cotton in 2025 is higher than previously expected, and at the same time, there was a resurgence of international macro disturbances, putting pressure on the market recently. According to the Commodity Market Analysis System of SunSirs, as of July 7th, the spot price of 3128B grade cotton was 15,202 RMB/ton, a decrease of 0.05% from last week.

Analysis review

Macroscopically, the United States and Vietnam reached a trade agreement, and goods exported from Vietnam to the United States will face a 40% tariff, including some Chinese goods. The market believes that the United States hopes to use the US Vietnam agreement as a model to reach similar agreements with other Southeast Asian countries, thereby suppressing China's textile and clothing transit trade. Overall, the market remained cautious and the upward momentum of domestic cotton prices may decline in the near future.

Domestically:

In terms of industry, some areas in northern Xinjiang have recently experienced hail disasters, but the affected area was not large, and the impact on new cotton production is expected to be limited. The short-term weather disturbances in cotton producing areas and the tight ending inventory still provided support for the cotton market. However, the year-on-year increase in actual cotton planting area in China has strengthened the expectation of high yield next year, and the upward trend of domestic cotton prices has slightly slowed down.

The survey results of the National Cotton Market Monitoring System show that by 2025, the actual planting area of cotton in China is 45.803 million mu, an increase of 2.707 million mu year-on-year, with a growth rate of 6.3%. The actual planting area of cotton in Xinjiang is 41.02 million mu, an increase of 3.103 million mu year-on-year, with a growth rate of 8.2%. The actual planting area of cotton in mainland China was 4.453 million mu, a decrease of 368,000 mu or 7.6% year-on-year.

In terms of demand: As entering July, the textile industry have obvious characteristics of a low season for consumption, and the profit margins of textile enterprises have further narrowed. Coupled with the continuous accumulation of downstream inventory, the willingness to replenish is weak, and the spinning start-up rate continues to decline, resulting in an increase in cotton yarn inventory. As of July 3rd, the operating load of mainstream textile enterprises was 71.1%, a decrease of 0.14% compared to the previous month. The overall operating load remained relatively stable, and there was no significant change in downstream orders of textile enterprises. Some small textile enterprises in mainland China stopped production to handle inventory, while Xinjiang textile enterprises maintained stable operation.

Internationally, the US Department of Agriculture has announced that the actual planting area of US cotton is higher than market forecasts, and the recent improvement rate of US cotton has significantly increased, leading to stronger expectations for increased US cotton production. The US Department of Agriculture (USDA) has released a report on the actual planting area of crops for the year 2025/26, which shows that the actual planting area of US cotton in the new year is 10.1 million acres, a decrease of 10% compared to 2024. But compared to the forecast in March, the area has been raised by 250,000 acres, and the decrease in area is lower than market expectations. As of June 29th, the excellent rate of US cotton was 51%, slightly better than the 50% in the same period last year, and there was also a significant improvement compared to before. Overall, the forecast for US cotton production may be raised.

Market outlook

The tight supply side pattern remains unchanged, providing certain support for cotton prices. Coupled with weather factors and speculative disturbances, short-term cotton prices will fluctuate to be stronger. However, the suppression of high yields and tariff uncertainty in the new year, as well as weak downstream demand, remain the main factors suppressing sustained price increases. It is expected that the upward momentum of domestic cotton prices will weaken in the short term, and the market will mainly fluctuate.

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