Price trend:

Last week, domestic cotton prices moved higher, supported by a continued loose monetary policy and reinforced policies to expand domestic demand. Downstream industries also showed a need for restocking. According to SunSirs' commodity market analysis system, as of December 15th, the spot price of 3128B grade cotton lint was 15,068 RMB/ton, a weekly increase of 0.30%.

In terms of futures, as of December 15th, the settlement price of the Zhengzhou Cotton Exchange's main contract was 13,915 RMB/ton, an increase of 180 RMB/ton compared to the previous Monday. International cotton prices remained weak, with the average weekly settlement price of the ICE cotton futures main contract at 63.89 cents/pound, a decrease of 0.44 cents/pound from the previous week's average settlement price, a decline of 0.7%.

Market Analysis

Domestic market: Last week, domestic cotton spot prices trended upwards. With the rapid progress of new cotton sales, the pressure from the abundant harvest was gradually being absorbed, and spot market prices remained firm. As of December 15, cotton harvesting in Xinjiang was fully completed, and the new cotton was being processed and brought to market in large quantities. According to data from the National Cotton Market Monitoring System, as of December 11th, the national new cotton processing rate was 84.0%, a year-on-year increase of 2.2 percentage points; the sales rate was 41.6%, a year-on-year increase of 23.5 percentage points, indicating rapid sales of new cotton and firm spot prices. National commercial inventory was showing an increasing trend. As of December 12th, 2025, the total commercial cotton inventory was 4.7023 million tons, an increase of 237,300 tons compared to the previous week.

Furthermore, market rumors suggest that the target area for cotton under the target price policy in Xinjiang for the 2026/27 season will be around 36 million mu (the actual cotton planting area in Xinjiang in 2025 was approximately 41-43 million mu), a reduction of 5-7 million mu compared to the previous year, representing a decrease of over 10%.

International Market: In the international market, the Federal Reserve's announcement of a 25-basis-point interest rate cut last week met market expectations, leading to a slight improvement in financial market sentiment. However, negative industrial data kept international cotton prices weak, with the average price slightly declining. According to the U.S. Department of Agriculture's December supply and demand report, U.S. cotton production was revised up by 34,000 tons to 3.107 million tons, while consumption was revised down by 21,800 tons to 348,000 tons, the lowest level in nearly 150 years. Ending stocks are projected to reach 980,000 tons, a 2.3% increase year-on-year, representing 32.6% of total cotton consumption.

Demand-wise: The textile market maintained its off-season characteristics. Production and sales in Xinjiang were better than in inland regions. As of December 12th, the operating rate of textile enterprises in mainstream regions was 65.3%, unchanged from the previous week. Last week, orders for inland textile enterprises remained limited, while the operating rate in Xinjiang remained basically stable at over 90%, and the operating rate in inland regions was around 60%. According to data from the General Administration of Customs, the expectation of progress in US-China trade negotiations drove a recovery in textile and apparel exports. In November, the export value of textiles and apparel was US$23.87 billion, a year-on-year decrease of 5.1%, a narrower decline of 7 percentage points compared to the previous month. Among them, the export value of textiles was US$12.28 billion, still achieving a 1% increase despite the high base in the same period last year.

The Ministry of Commerce and two other departments jointly issued the "Notice on Strengthening Business and Financial Collaboration to Boost Consumption with Greater Force," reinforcing cooperation between the business and financial systems and guiding financial institutions to increase support for key areas of consumption, thereby helping to boost and expand consumption. The macroeconomic outlook is generally positive, and market confidence has improved.

Market Outlook

As of December 15, cotton harvesting in Xinjiang had been fully completed, and the cost of raw cotton acquisition was fixed, further solidifying the price floor for cotton. The supply side's influence on prices had decreased. On the demand side, the replenishment of essential stocks by textile enterprises, coupled with favorable policies, provides support for cotton prices, but the impact was limited. Market attention is focused on changes in cotton planting area in Xinjiang in 2026 and the cotton target price policy. In the short term, cotton prices are expected to maintain a volatile but generally upward trend.

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