Price trend:

Recently, domestic cotton prices have fluctuated upwards. Macroeconomic policies aimed at boosting consumption and stabilizing investment have lifted market sentiment; downstream industries continued to replenish raw material inventories, which also provided some support to the market. According to SunSirs' commodity price analysis system, as of December 22nd, the spot price of 3128B grade lint cotton was 15,157 RMB/ton, a weekly increase of 0.59%.

Market Analysis

The widening price difference between domestic and international cotton, stable domestic demand during the off-season, and uncertainty regarding next year's planting expectations drove Zhengzhou cotton futures to rise continuously. The main Zhengzhou cotton futures contract broke through the 14,000 RMB/ton mark, with the settlement price reaching 14,080 RMB/ton as of December 22nd, an increase of 165 RMB/ton compared to last Monday. Meanwhile, the oversupply of US cotton and persistently weak exports led to a continuous decline in ICE cotton futures, with the main ICE contract settling at 63.75 cents last weekend, a yearly low. Although the current price difference between domestic and international cotton further enhances the competitiveness of imported cotton, cotton-consuming enterprises indicated that due to the quota restrictions, they will maintain their existing raw material inventory levels and will not make large-scale purchase plans until new quotas are allocated.

Domestic situation: Cotton harvesting in Xinjiang was basically complete. As of December 18, 2025, the cumulative average purchase price for hand-picked cotton was 7.04 RMB/kg, a year-on-year increase of 0.28%. As of December 18, 2025, the cumulative average purchase price for machine-picked cotton was 6.17 RMB/kg, a year-on-year decrease of 2.22%. With the continuous increase in processing volume, commercial cotton inventories were showing a seasonal rebound, and surveys indicated that national commercial inventories were increasing. As of December 19, 2025, the total commercial cotton inventory was 5.0473 million tons, an increase of 255,000 tons compared to the previous week.

Many cotton enterprises adopted a strategy of processing and selling simultaneously. Most had seen faster sales progress compared to the same period last year. As of December 18th, the national processing rate was 88.0%, a 2.0 percentage point increase year-on-year; the national sales rate was 47.3%, a 25.0 percentage point increase year-on-year.

International market: Last week, international cotton prices remained low. Falling crude oil prices in the broader market and macroeconomic pressures weighed on commodity markets. In the industry, U.S. cotton export sales data remained weak for two consecutive weeks, leading to a bearish market sentiment. The average settlement price of the ICE cotton futures main contract was 63.89 cents/pound, a decrease of 0.44 cents/pound or 0.7% compared to the average settlement price of the previous week.

Demand-side: Downstream cotton yarn prices remained stable with a slight upward trend. Cotton raw material prices continued to rise, but yarn prices struggled to keep pace, squeezing profit margins for textile companies. As of December 18th, the operating rate of textile companies in mainstream regions was 65.2%, a decrease of 0.15% from the previous week. Last week, mainland textile companies saw a significant decrease in new orders and an increase in inventory, leading to a slight reduction in operating rates. Some companies indicated that they would be taking holidays earlier than usual; operating rates in Xinjiang remained stable, above 90%. Downstream textile operating rates continued to decline, with fewer orders and increased inventory. Mainland textile companies experienced a significant increase in inventory, with slow inventory turnover; finished yarn inventory in Xinjiang was approximately 35-40 days, while mainland companies had about 20-25 days of inventory. As of December 18th, the average yarn inventory for textile companies in major regions was 31.7 days, a weekly increase of 1.60%.

Market Outlook

As of December 22, the pressure on cotton supply was gradually easing. Cotton harvesting in Xinjiang had been fully completed, and the cost of raw cotton acquisition had been fixed, further solidifying the bottom of cotton prices. It is expected that the supply side will not exert downward pressure on prices. On the demand side, restocking driven by essential needs from textile companies, coupled with favorable policies, provides some support, but the strength of this support is limited.  However, increasing raw material and finished product inventories, along with a decrease in new orders, will put some pressure on cotton prices. Therefore, cotton prices are expected to maintain a slightly upward fluctuating trend in the short term.

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