In 2025, domestic cotton prices exhibited characteristics of "wide fluctuations and divergence between domestic and international markets," with the overall price level remaining relatively low compared to the past five years. The global cotton market operated under the premise of "strong supply and weak demand," while also being influenced by a combination of factors such as trade policies and adjustments in planting structures. Global cotton production in the 2026/27 season may decline, particularly due to the potential impact of cyclical adjustments in China's cotton policies. Market attention will gradually shift from "high inventory pressure" to the process of "rebalancing supply and demand."
2025 Cotton Price Trends Review: A Year of Volatility Driven by Policies and Expectations
(I) Overview of Cotton Spot and Futures Market Performance Throughout the Year
In 2025, cotton prices were generally at their lowest level in five years. Looking back at this year's cotton market trends, affected by US tariff policies, cotton prices experienced several sharp increases and decreases. As of the 26th, the overall price increase for the year was approximately 4.4%. According to the monthly candlestick chart from SunSirs, there were more months with price increases throughout the year, with the highest price reaching 15,596 RMB/ton at the end of July, and the lowest price at 14,124 RMB/ton in early May.
In terms of cotton futures: the trends of Zhengzhou cotton and US cotton were mostly similar, but starting in December, the market trends diverged. Domestic cotton prices rose steadily, while US cotton fell to its lowest point of the year. The highest price for the main Zhengzhou cotton contract in 2025 was around 14,300 in mid-July, compared to around 16,500 RMB/ton last year. The lowest price was around 12,565 RMB/ton in early April, compared to around 13,320 RMB/ton last year. The highest point for US cotton this year was 69.32 cents, and the lowest was around 62.9 cents, a significant decrease compared to last year's market.
(II) Analysis of the trend in different phases
Phase 1 (January–April): Weakening expectations and tariff impacts
At the beginning of the year, prices remained stable or increased slightly, supported by the acquisition costs from the end of 2024.
In early April, the US implemented its tariff policy against China, leading to a sharp deterioration in global trade sentiment and a rapid decline in cotton prices, which hit their lowest point of the year.
Second phase (May–July): Policy easing and recovery of demand expectations
The US-China-Japan Geneva statement announced a reduction in some tariffs, boosting market confidence.
Coupled with temporary inventory replenishment by domestic textile companies and faster commercial inventory turnover, cotton prices fluctuated upwards, reaching their annual high at the end of July.
Phase Three (August–October): High yield expectations and a disappointing peak season
Before the new cotton crop came to market in September, the market generally expected an increase in domestic production for the 2025/26 season, with supply pressure dominating sentiment.
The traditional peak consumption season of September and October proved lackluster, and cotton prices continued to decline, giving back previous gains.
Phase 4 (November–December): Cost support and policy safeguards
In some areas of southern Xinjiang, procurement costs were higher than expected, providing support for spot prices.
Domestic macroeconomic policies were focused on "expanding domestic demand," providing strong support for downstream demand. The Federal Reserve's interest rate cut has improved liquidity expectations, leading to a stabilization and rebound in cotton prices. However, U.S. cotton remained weak due to ample global supply.
China's Cotton Supply and Demand Landscape in 2025/26: A Balancing Act Between High Inventories and Weak Consumption
(1) Supply side: Production increased, and inventories were at historically high levels
Production:
According to the survey results of the National Cotton Market Monitoring System, the average national cotton yield in 2025 was 161.7 kg/mu, a year-on-year increase of 4.4%; the total national output reached 7.409 million tons, a year-on-year increase of 11.0%; of which Xinjiang's output was 7.047 million tons, a year-on-year increase of 12.2%. In 2025, the average cotton yield in Xinjiang was 171.8 kg/mu, a year-on-year increase of 3.7%, with a total output of 7.047 million tons, a year-on-year increase of 12.2%.
Inventory:
Commercial Inventory: As of the end of November 2025, national commercial cotton inventory totaled 4.6836 million tons, a slight increase year-on-year, and at a high level compared to the same period in the past five years.
Industrial inventory: As of the end of November 2025, textile enterprises had 940,000 tons of raw material inventory and 1,106,000 tons of available inventory, which was gradually accumulating with the arrival of new cotton on the market.
Imports: From January to November, cumulative cotton imports totaled 890,000 tons, a significant decrease of 64% year-on-year, indicating a substantial contraction in the annual import volume. Brazil remained the top source country.
However, considering that the cotton import quota for 2025 was nearly exhausted, coupled with the slow replenishment of high-quality cotton spot supplies at ports and the fact that most textile mills were maintaining only essential inventory levels, some international cotton merchants and trading companies predict that the month-on-month increase in China's cotton imports in December will narrow.
(2) Demand: Domestic demand was growing slowly, external demand was under pressure, and profit margins across the industrial chain were low
Domestic consumption: The Ministry of Agriculture raised its consumption forecast for the 2025/26 season to 7.6 million tons, but the actual level of downstream demand remained to be seen.
Textile sector: Cotton yarn prices fell by approximately 3.5% throughout the year, and spinning profits were in a loss-making state for most of the time. Cotton yarn imports rebounded in November, but the cumulative total from January to November reached 1.3255 million tons, still a year-on-year decrease of 3.04%.
(3) End-user consumption:
Domestic demand: From January to November, retail sales of clothing, footwear, hats, and textiles totaled 1,359.7 billion yuan, a year-on-year increase of 3.5%, indicating a stable growth rate.
Exports: From January to November, cumulative exports of textiles and apparel reached US$267.82 billion, a year-on-year decrease of 1.9%. Exports to the United States decreased by 11.3%, and exports to ASEAN decreased by 5.9%, indicating a continuing trend of order shifts.
Global cotton supply and demand: The overall loose supply-demand situation remains unchanged, but marginal changes are becoming apparent
(1) Key takeaways from the USDA December report: Minor adjustments, but the overall tone remains dovish
Production: Global production for the 2025/26 season is projected at 26.081 million tons, a decrease of 64,000 tons compared to the previous estimate, but still an increase of 111,000 tons year-on-year; an upward revision in U.S. yields supported the production forecast.
Consumption: Global consumption decreased by 60,000 tons month-on-month, with consumption forecasts revised downwards for countries including China, Bangladesh, and Türkiye.
Inventory: Global end-of-period inventory increased slightly by 9,000 tons month-on-month and by 296,000 tons year-on-year, indicating that inventory accumulation pressure still exists in major producing countries.
(2) Structural Characteristics: High production in major producing countries, but differentiated consumption patterns across regions
Production in countries such as the United States, Brazil, and Australia remains high or continues to increase.
Consumption growth is weak, and traditional textile-producing countries in Asia, in particular, face intense competition for orders and cost pressures.
2026 Market Outlook: A transitional year for cotton supply, moving from "oversupply" to "rebalancing"
In 2025, the cotton market completed its bottoming-out and shifted to a higher price level amidst a mix of bullish and bearish factors. Market confidence in cotton prices has accumulated to some extent. Looking ahead to 2026, market forecasts predict a year-on-year decrease in global cotton production for the 2026/27 season. Major producing countries such as the United States, India, and Australia are all facing downward pressure on production, which will lead to a further decline in global ending stocks and a shift towards a tighter supply-demand balance.
Supply side: Xinjiang's cotton planting area will undergo a structural reduction in the 2026/27 season.
Significant policy changes are underway in Xinjiang's cotton industry, with a structural reduction in planting area planned for the 2026/27 season. According to local cotton companies and relevant departments in Xinjiang, the target planting area corresponding to the target price for Xinjiang cotton in the 2026/27 season has been set at approximately 36 million mu. This figure represents a reduction of 5 to 7 million mu compared to the actual planting area of 41 to 43 million mu in 2025, a decrease of over 10%, making it the most significant structural adjustment in Xinjiang's cotton planting sector in recent years.
The total quota for cotton imports under the sliding scale tariff for processing trade in 2025 is 200,000 tons, the same as in 2024, which is in line with expectations. It is expected that cotton import volumes in the 2026/27 season will remain at the same low level as the previous season.
Cost side: The purchase price of raw cotton in the 2025/26 season is expected to be flat or slightly lower compared to the previous year
In 2025, the target price for Xinjiang cotton is 18,600 yuan per ton. This year, the overall purchase price of raw cotton in Xinjiang has been more stable than in previous years, showing only slight fluctuations.
The 2025/26 season is also the final year of the target price subsidy policy of 18,600 RMB/ton, and the policy is highly likely to change in the 2026/27 season. It is crucial to closely monitor the new target price subsidy rules: if the new subsidy standard is lowered, it may lead to a reduction in cotton planting area in Xinjiang.
Summary and Outlook:
Supply side: At the beginning of this year, cotton spinning enterprises had low raw cotton inventories. After the new cotton crop came onto the market, they actively replenished their stocks, and the sales of ginned cotton accelerated, thus easing the pressure on the supply side.
Demand side: Domestically, pre-holiday stocking before the Spring Festival is providing support, and there is an expectation of increased cotton demand in the first quarter of 2026, presenting an opportunity for price increases. Domestic policies are stimulating the continuous expansion of Xinjiang's yarn mill capacity, and coupled with the stimulating effect of policies on the consumer end, terminal apparel consumption is expected to recover. Internationally, under the expectation of global easing policies, terminal apparel consumption in Europe and the United States will release restocking demand next year, and overall consumption in major Southeast Asian garment manufacturing countries is expected to rise.
Looking ahead to 2026: 2026 will be a crucial year where "supply-side reform" and "demand-side recovery" work together. The planned significant reduction in cotton planting area in Xinjiang could become an important variable driving the global cotton supply and demand from a "surplus" to a "balanced" state.
Key areas of focus include: the actual implementation of policies to reduce planted area; the efficiency of inventory reduction across the supply chain and the transmission of recovering end-user orders; and the phased impact of macroeconomic policies and the trade environment on market sentiment.
Before the start of the new planting season, cotton prices are likely to continue fluctuating within a range, supported by costs and government policies at the lower end and influenced by inventory levels and demand at the upper end, until new supply and demand drivers emerge.
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