Price trend

During the transition period between old and new cotton, with continued pressure on new cotton supply, insufficient quality during the peak season, and a lack of substantial market drivers, cotton prices initially rose before falling last week. According to the SunSirs commodity market analysis system, as of September 22, the spot price of 3128B grade cotton lint was 15,242 RMB/ton, down 1.53% from the beginning of the month.

Analysis review

On the supply side:

As of September 22, although cotton inventory levels were relatively low, providing some support for cotton prices, the impending arrival of new cotton had heightened expectations of a bumper harvest. Furthermore, after National Day, Xinjiang's machine-picked cotton crop will enter a peak season of large-scale harvesting and market launch. Market attention is focused on whether seed cotton prices will rise due to the rush to harvest high-quality cotton resources.

Institutional forecasts indicate that cotton production in the new year will exceed expectations, with a significant year-on-year increase. A survey by the China Cotton Association indicates that the national cotton planting area reaches 44.823 million mu (approximately 1.8 million hectares) in 2025, a year-on-year increase of 1.8%. Thanks to better-than-average weather and farmers' effective water and fertilizer management, cotton is growing well, with Xinjiang setting new historical highs in per-unit yield and total output. The national total output is projected to reach 7.216 million tons, an 8.3% year-on-year increase of 321,000 tons from the previous period, reaching a new high since 2013.

Cotton imports in August were approximately 70,000 tons, still a year-on-year decrease of 51.6%, but increased by approximately 20,000 tons month-on-month, a month-on-month increase of 40%, continuing the sharp month-on-month rebound in cotton imports in July (a month-on-month increase of 66.7%). From January to August 2025, China's cumulative cotton imports reached 590,000 tons, a year-on-year decrease of 72.6%. Driven by the sharp month-on-month increase in cotton imports in July and August, the year-on-year decline in cotton imports in the first eight months narrowed.

On the demand side:

Spinning mill operating rates remained stable, indicating that downstream textile enterprises were operating normally. As of September 18, textile mills in major regions were operating at 66.6%, a 0.15% increase from the previous month. The recovery in operating rates had slowed, and despite entering peak season, downstream order growth had been limited. Although textile mills were maintaining low cotton yarn inventories, with some potential for replenishment, enterprises were generally adopting a wait-and-see approach and had yet to engage in large-scale purchasing.

Internationally:

The Federal Reserve resumed interest rate cuts, favoring a rebound in the commodity market. Meanwhile, recent US cotton export contract data showed improvement, leading to a slight increase in ICE cotton futures prices last week. According to the USDA, as of the week ending September 11, weekly contracts for 2025/26 US Upland cotton reached 42,200 tons, a 44% increase month-over-month and a 60% increase year-over-year. Weekly shipments of 2025/26 US Upland cotton totaled 27,300 tons, a 7% decrease month-over-month and a 1% increase year-over-year. Last week, the average weekly settlement price of the main ICE cotton futures contract was 66.99 US cents/pound, a slight increase of 0.41 cents/pound, or 0.6%, from the previous week.

Market outlook

As of September 22, the cotton market was temporarily in a state of oscillation between bullish and bearish factors, and prices are expected to remain volatile in the short term. Strong pre-sales of new cotton and expectations of a consumer recovery were boosting prices, but increasing supply pressure and continued weak demand were significantly dampening any potential price rebound. Future attention will be focused on the actual purchase price of seed cotton and potential drivers of price increases under promotional fee policies.

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