Price trend

With the tight supply pattern and the favorable macroeconomic situation in China, cotton prices continued to rise during the week. According to the Commodity Market Analysis System of SunSirs, as of July 14th, the spot price of 3128B grade cotton was 15,312 RMB/ton, an increase of 0.73% compared to last week.

Analysis review

Domestically:

In terms of industry, as of July 11th, the commercial cotton inventory in China was 2.6063 million tons, a decrease of 141,300 tons compared to the previous week. Among them, Xinjiang cotton accounted for 1.9128 million tons, and the commercial cotton inventory, especially in Xinjiang, decreased rapidly. Recently, cotton production areas in Xinjiang have fully entered the flowering and ringing period, about a week earlier than the previous two years. According to the meteorological department's forecast, many areas in Xinjiang will experience rainfall in the near future, and attention should be paid to the disturbance of local weather risks on yield expectations.

In terms of demand, there was a shortage of new orders and slower sales at the domestic textile end during the off-season. The operating rate of yarn factories continued to decline, and the profit margins of textile enterprises were further narrowed. The phenomenon of high temperature holidays in small and medium-sized yarn factories in mainland China was increasing, and their enthusiasm for raw material procurement was weak. In terms of operating rate, as of July 11th, the operating load of mainstream textile enterprises was 70.40%, a decrease of 0.7% compared to the previous month. Large yarn mills in Xinjiang remained at around 90%, while those in mainland China were mostly between 50% and 80%. Some small factory clusters lowered their operating load to around 50%. Textile companies generally responded to the off-season market by reducing production and load, and the pressure of destocking still existed.

Internationally:

The supply growth rate of USDA in the new year of July exceeded the consumption growth rate, and the expectation of loose supply was bearish on cotton prices. Coupled with the uncertainty of macro trade policies, the United States announced the imposition of tariffs on multiple countries again last week, which will be implemented from August 1st. Market concerns have intensified, and international cotton prices have closed down for two consecutive days. The weekly average settlement price of ICE cotton main contract was 67.64 cents/pound, down 0.67 cents/pound from the previous week. According to the July report data from the US Department of Agriculture (USDA), global supply has increased, with demand growth being smaller than supply, and ending inventory has increased. The direction of the monthly report adjustment was bearish.

The US Department of Agriculture has released a global cotton supply and demand forecast, raising global production, consumption, and ending inventory for 2025/26, and lowering trade volume and beginning inventory. Global production increased by 311,000 tons, consumption increased by 80,000 tons, and global exports decreased by 22,000 tons. The inventory at the beginning of the fiscal year 2025/26 decreased by 111,000 tons, and the inventory at the end of the fiscal year 2025/26 increased by 113,000 tons, as the increase in production exceeded the increase in consumption and the decrease in initial inventory.

Market outlook

The tight domestic supply pattern supported cotton prices, but downstream operating rates continued to decline during the off-season, making it difficult for prices to be transmitted downwards; At the same time, the expectation of high production in the new year combined with the expectation of early listing may limit the rebound space. In terms of new cotton growth, Xinjiang cotton has temporarily entered the flowering and bell period, with overall good growth. The weather remains to be observed in the future, and there is still uncertainty in the external situation. It is expected that cotton prices will mainly fluctuate in a narrow range in the short term.

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