Price trend

The cotton market experienced mixed bullish and bearish conditions in September, exhibiting an overall volatile and weaker pattern. Prices fell at the beginning of the month, pressured by expectations of a bumper new cotton harvest. Prices rebounded mid-month, supported by tight spot inventories and firm new cotton opening prices. However, at the end of the month, prices weakened again due to expectations of a concentrated new cotton market and a slow recovery in the downstream textile market during the traditional peak season, leading to a lack of new orders. According to the SunSirs Commodity Market Analysis System, as of September 28, the spot price of 3128B grade cotton lint was 15,022 RMB/ton, down 2.95% from the beginning of the month.

Analysis review

On the futures front, Zhengzhou cotton futures hit a three-month low due to the significant pressure of a bumper cotton harvest and concentrated market demand. With no significant downstream fundamentals driving the market near the end of the month, upward momentum was lacking. As of September 26, the settlement price of the Zhengzhou cotton main contract was 13,460 RMB/ton, down 4% from the beginning of the month. On the ICE Futures platform, upward momentum has been sluggish since September. Despite the Federal Reserve's resumption of interest rate cuts and a weaker dollar that had benefited the commodity market rebound, the external energy and grain markets had generally declined. With no new support from either the industry or elsewhere, ICE cotton futures prices remained weak and volatile at the end of the month. As of September 26, the settlement price of the ICE cotton main contract was 66.4 cents/pound, down 0.21% from the beginning of the month.

Supply side: New cotton harvest was expected to be realized, and supply pressure was prominent

As of September 28, commercial cotton inventories in the domestic distribution chain were low. With new and old cotton temporarily transitioning, prices for older cotton were volatile, and traders were clearly willing to hold prices high for high-quality supplies. National commercial inventories were declining. As of September 26, 2025, total commercial cotton inventories stood at 1.0315 million tons, a decrease of 111,100 tons from the previous week. Machine-picked cotton from Xinjiang began to arrive sporadically in late September, with the peak season in mid-to-late October. As of September 25, 2025, the national cotton harvest rate was 1.5%, a year-on-year increase of 0.2 percentage points; the national sales rate was 26.0%, a year-on-year increase of 10.3 percentage points.

Cotton had largely matured in Xinjiang's main producing areas. Hand-picked cotton was gradually entering the market in southern Xinjiang, while a small amount of machine-picked cotton had begun harvesting in northern Xinjiang. New cotton had been harvested and weighed in small quantities in many parts of the mainland. The tension between supply pressures caused by the large-scale arrival of new cotton and the support of low inventories was expected to intensify. Xinjiang's yield and total output were expected to set new historical highs. Continued expectations of a bumper harvest will gradually ease the tight commercial inventory situation of old-crop cotton, ushering in a period of seasonal inventory accumulation. Recently, the supply of hand-picked cotton in Xinjiang has increased slightly, with the purchase price ranging from 7.3 to 7.5 RMB per kilogram. In some areas of northern Xinjiang, the purchase price of seed cotton was 6.2 to 6.4 RMB per kilogram.

A survey by the China Cotton Association indicates that China's cotton planting area is 44.823 million mu (approximately 1.8 million mu) in 2025, a year-on-year increase of 1.8%. Xinjiang's total yield has reached a new record high, with the national total output projected at 7.216 million tons, up 8.3% year-on-year and 321,000 tons from the previous period, reaching a new high since 2013. With expectations of a bumper harvest from the new cotton crop entering the market, coupled with the impending October cotton season, supply pressure is evident.

USDA supply and demand report received a lukewarm response from the market, with no positive guidance yet

The U.S. Department of Agriculture (USDA) raised its forecasts for 2025/26 production, consumption, and trade, while lowering its beginning and ending inventories. Global production was raised by 217,700 tons, consumption by 185,000 tons, and trade by a slight 21,800 tons. Global ending stocks for 2025/26 were lowered by 174,200 tons to 15.925 million tons, the lowest level in nearly four years. The report indicates that global cotton consumption in 2025/26 showed a slight month-over-month increase, and this supply and demand dynamic provided some support for international cotton prices. However, U.S. cotton contracts and shipments declined year-over-year. As of September 28, external macroeconomic support was lacking, and cotton demand remained unlikely to improve. Furthermore, normal weather conditions, optimistic new cotton growth, and the anticipated realization of increased new cotton production are all negatively impacting cotton prices.

On the demand side: The "Golden September" is coming to an end, and the textile peak season is not as expected

September, traditionally peak season, saw downstream production activity show a strong performance in Xinjiang, while weaker performance in the mainland. Large spinning mills in Xinjiang maintained an operating rate of over 80%, while small and medium-sized mainland textile mills, facing poor profits and a shortage of orders, saw operating rates hovering between 60% and 70%. As of September 26th, textile mills in major regions were operating at 66.6%, flat week-on-week, indicating a slowing recovery in operating rates. Cotton inventory at textile mills in major regions stood at 27.30 days of inventory, indicating a lack of appetite from downstream and end-users. While there was no significant stockpiling prior to the National Day holiday, new orders have slowed compared to previous periods, indicating a lack of market confidence.

The recent downward adjustment of Zhengzhou cotton futures has led to a corresponding decrease in domestic cotton spot basis quotes and fixed prices. This has led to a continuous recovery in cotton mills' immediate spinning profits. Cotton yarn exporter quotes and prices in various textile markets have slightly declined before quickly stabilizing, leading to a strong demand from textile companies and cotton yarn traders. Although new orders for the "golden September and silver October" period fell somewhat short of expectations, cotton yarn destocking has accelerated, and raw material inventories at cloth mills and consumer terminals remain relatively low, resulting in stable quotes from downstream cotton yarn manufacturers.

Exports: Foreign trade faced significant pressure. In August, dragged down by a decline in clothing exports, China's textile and apparel exports declined month-over-month, with cotton products experiencing a sharper decline. In August, China's textile and apparel exports totaled $26.54 billion, a year-on-year decrease of 5% and a month-over-month decrease of 0.9%. In August 2025, cotton product exports reached 669,100 tons, a year-on-year increase of 4.37%, but the value was $5.431 billion, a year-on-year decrease of 7.46%. Unit export prices continued to decline month-over-month, and the export market remained focused on price-for-volume trading.

Market outlook

The cotton market navigated a volatile landscape in September, oscillating between weak realities and strong expectations, with an overall bearish bias. With the National Day holiday approaching, textile companies were temporarily experiencing relatively smooth production and sales, with downstream weaving mills replenishing inventory in preparation for the holiday. New cotton will enter the market in large quantities during and after the holiday, with deliveries generally beginning October 15th and ending before October 31st at the latest. With the large-scale arrival of new cotton and ample supply, the rush to harvest, common in previous years, has significantly decreased this year, leading to a more relaxed market sentiment and potentially suppressing prices during the initial stages of the new cotton season. Cotton prices are expected to face significant upward pressure in October, with attention focused on harvest progress in Xinjiang, the recovery of consumer spending, and changes in export policies.

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