The overall cotton price in July showed a slight upward trend, mainly because the supply was tightening near the end of the period and the domestic macro-economic situation was warm, which was good for cotton prices. However, demand continued to weaken in the off-season atmosphere of the downstream, suppressing the increase in cotton prices. According to the commodity market analysis system of SunSirs, as of July 24, the spot price of 3128B grade cotton was 15,573 RMB/ton, up 2.39% from the beginning of the month.
In terms of futures, both domestic and foreign cotton futures rose. Zheng cotton changed the previous range fluctuations in the second half of the month. The main contract climbed to more than 14,000, ending more than two months of oscillation and consolidation. As of the 24th, the settlement price of Zheng cotton main contract was 14,160 RMB/ton, up 3.1% from the beginning of the month. As of the 23rd, the main contract of ICE cotton futures was 68.24 cents/pound, up 0.3% from the beginning of the month.
Market review: In the first half of July, despite the decrease in commercial inventory, the actual cotton planting area in China in 2025 was 45.803 million mu, an increase of 2.707 million mu year-on-year, an increase of 6.3%, and the actual planting area was higher than previously expected. With the continuous accumulation of downstream inventory and the continuous decline in spinning machine operation rate, cotton prices showed a narrow range of fluctuations. In the second half of the month, the commercial cotton inventory, especially the Xinjiang inventory, declined rapidly. In addition, the weather risks in Xinjiang disturbed the production expectations. There was no clear news about the quota in 2025, and imports were expected to decrease. Under the obvious tight supply expectations, the main contract of Zheng cotton rose sharply, driving the spot market higher.
Domestic:
Inventory: As of the end of June, my country's commercial cotton inventory was 2.8298 million tons, a month-on-month decrease of 297,100 tons; industrial inventory was 903,000 tons, a month-on-month decrease of 27,100 tons; the total was 3.7328 million tons, a month-on-month decrease of 324,200 tons and a year-on-year decrease of 378,200 tons. As of July 18, 2025, the total commercial cotton inventory was 2.4575 million tons, a decrease of 149,000 tons from last week.
Import: The quota this year is tight, and the amount of imported cotton has been greatly reduced. According to customs statistics, my country's cotton imports in June 2025 were 30,000 tons, a decrease of 10,000 tons from the previous month, a decrease of 25.0%; a decrease of 130,000 tons from the same period last year, a decrease of 82.1%. In 2025, my country's cumulative cotton imports reached 460,000 tons, a decrease of 74.3% year-on-year.
New cotton growth: Xinjiang cotton is growing well overall, and the expectation of high yield is strong. The survey results of the National Cotton Market Monitoring System show that the weather in the main cotton-producing areas is generally conducive to the appearance and boll formation of cotton, and the degree of disaster is generally light. It is estimated that the yield of new cotton in 2025 will be 158.7 kg/mu, a year-on-year increase of 2.5%.
Demand: Although the rise in cotton prices has provided some support to the cotton yarn market, it has increased pressure on downstream textile companies. On the one hand, with the rise in cotton prices, the cost of raw materials in the downstream market has increased, and production profits have declined; on the other hand, it is still the traditional off-season, large orders and long orders are scarce, the market purchase and sales activity has declined, and the inventory pressure of enterprises has continued to increase. At present, the operating rate of spinning mills in various regions has been stable and slightly reduced. The large spinning mills in Xinjiang are about 90%, the large enterprises in Henan are about 60-70% on average, and the large spinning mills in the Yangtze River area of Jiangsu, Zhejiang, Shandong, and Anhui are operating at an average of 60-70%.
International:
International cotton prices fluctuated in July, and the overall trend did not fluctuate much. As of July 23, the settlement price of the ICE main contract was 68.24 cents, up 0.3% from the beginning of the month. In July, the U.S. Department of Agriculture raised the global production, consumption and ending inventory for 2025/26, and lowered the trade volume and beginning inventory. Global production was raised by 311,000 tons, consumption was raised by 80,000 tons, and global exports were lowered by 22,000 tons. The beginning inventory of 2025/26 was reduced by 111,000 tons, and the ending inventory of 2025/26 was increased by 113,000 tons. The increase in production exceeded the increase in consumption and the reduction in the beginning inventory. The increase in supply in the new year is greater than the increase in consumption, and the expectation of loose supply is bearish for cotton prices.
Market forecast: In terms of macroeconomics, China and the United States will hold a new round of negotiations in August. Pay attention to the progress of the event and its impact on the market. On the whole, the cotton market in August may still have room for upward movement. The current low inventory status of domestic cotton will still provide strong support for cotton prices. However, under the current off-season demand, the pressure on terminal finished product inventory is still accumulating under the continuous squeeze of profits, which may limit the upward space of cotton prices.
