In 2025, China's cotton market will see relatively ample supply and resilient demand, with prices primarily fluctuating within a narrow range. Xinjiang's cotton planting area and yield both increased, driving total production to a record high for the second consecutive year. The region accounts for over 95% of the nation's total output, further solidifying its dominant position in the industry. Amid complex global political and economic conditions, rising trade protectionism, and intensifying synthetic fiber substitution, China's cotton textile and apparel exports faced downward pressure, leading to a significant decline in cotton imports. Domestically, cotton consumption remained largely stable, supported by consumption-boosting policies and sustained growth in Xinjiang's textile production capacity. Domestic cotton prices fluctuated within a narrower range as market participants regained rationality. New cotton procurement proceeded smoothly overall, with purchase prices trending downward.

December 2025: New Year demand boosted textile orders, maintaining high production and sales levels. Xinjiang cotton procurement concluded, with processing volumes continuing to rise and ample market supply. During the month, meetings including the Central Economic Work Conference were held, sustaining positive macroeconomic sentiment. Domestic cotton prices rose steadily driven by policy expectations, closing at the month's peak by month-end.

The China Cotton Association forecasts that for the 2025/26 season:

- National cotton production will reach 7.278 million tons, up 9.2% year-on-year;

- Imports will total 1.1 million tons, up 4.5% year-on-year; consumption at 8.1 million tons, up 3.8% year-on-year; and ending stocks at 10.116 million tons, up 2.7% year-on-year.

I. Textile Production Rises, Yarn Prices Increase Month-on-Month

Driven by macroeconomic policy expectations and pre-holiday raw material restocking by downstream sectors, both domestic and international orders for textile enterprises improved in December 2025, with key product output increasing month-on-month. Textile and apparel exports showed seasonal recovery, with export value rising month-on-month, particularly for cotton garments to ASEAN countries.

Regarding exports, increased Christmas season orders from European and American markets at year-end drove month-on-month growth in China's textile and apparel export value for December 2025, though year-on-year figures remained negative. According to General Administration of Customs data, China's textile and apparel exports reached $25.99 billion that month, down 7.4% year-on-year but up 8.9% month-on-month. Cotton textile exports reached $1.01 billion, up 0.7% year-on-year and 6% month-on-month. Cotton apparel exports totaled $2.33 billion, down 6.6% year-on-year but up 28.3% month-on-month. Exports to the United States amounted to $450 million, rising 29% month-on-month, while exports to ASEAN reached $380 million, surging 40.8% month-on-month. Affected by factors such as weak global textile consumption and substitution by Southeast Asian products, China's textile and apparel exports faced pressure in 2025, with cumulative annual exports totaling $293.85 billion, down 2.4% year-on-year.

On the production side, data from the National Bureau of Statistics showed that national yarn output in December reached 2.132 million tons, down 1.1% year-on-year but up 4.6% month-on-month. Cumulative yarn production for 2025 reached 22.158 million tons, a slight 0.1% decrease year-on-year. Xinjiang's yarn output outperformed inland regions due to corporate cost control and industrial clustering advantages. In December, Xinjiang's yarn production was 315,000 tons, up 13.2% year-on-year and 1.9% month-on-month. Cumulative production for 2025 reached 3.35 million tons, a 21.2% increase year-on-year.

Regarding prices, domestic pure cotton yarn followed cotton's upward trend. In December, the average price of domestic 32-count pure cotton yarn was 20,901 RMB/ton, down 309 RMB year-on-year but up RMB337 month-on-month. The average price of imported 32-count pure cotton yarn was 21,150 RMB/ton, down RMB811 year-on-year but up RMB53 month-on-month.

II. Acquisition Nears Conclusion with Prices Retreating

By December 2025, national cotton acquisition was nearing completion. Late-harvested cotton exhibited poor quality, leading to predominantly declining prices. Xinjiang completed its acquisition within the month, with machine-picked cotton prices concentrated at 5.6-5.8 RMB/kg at month's start, falling to 5.4-5.6 RMB/kg in mid-to-late December. Inland acquisition prices remained stable with slight declines, ranging between 5.8-6.5 RMB/kg. According to the China Cotton Association survey, the national average seed cotton purchase price for the month was 5.68 RMB/kg, down 5% year-on-year and 8.2% month-on-month. Domestic seed cotton sales entered their final phase. As of December 31, the sales progress reached 87.3%, accelerating by 2.4 percentage points year-on-year. Specifically, the Yangtze River Basin recorded 98.7% (up 4.3 percentage points YoY), while the Yellow River Basin reached 81.6% (up 3.3 percentage points YoY).

As of December 31, 2025, a total of 1,093 cotton processing enterprises nationwide underwent notarial inspection, with a total inspected weight of 6.371 million tons. Among these, 1,016 processing enterprises in Xinjiang accounted for 6.295 million tons, while 77 enterprises in other regions accounted for 76,000 tons. During the same period, 220 enterprises in Xinjiang obtained 13,000 “Premium Sustainable Cotton” trademark usage certificates, covering a total of 570,000 metric tons of lint cotton.

III. Cotton Imports Reach Annual Peak

In December 2025, the widening price differential between domestic and international cotton boosted import appeal, driving China's cotton imports to their highest level of the year. According to General Administration of Customs data, China imported 177,000 metric tons of cotton in December, marking a 30.6% year-on-year increase and a 49.3% month-on-month rise. Southern Hemisphere countries were the primary sources, with Brazilian cotton accounting for 60% and Australian cotton for 21%. China's cotton imports contracted significantly in 2025, totaling 1.065 million metric tons for the year—a 59.2% year-on-year decrease.

The USDA's January supply and demand report revised global cotton production downward to 26.003 million tons for the 2025/26 season, while consumption was revised upward to 25.892 million tons, indicating a net upward adjustment. U.S. cotton production was revised downward to 3.031 million tons, a 2% decrease from the previous month.

IV. Both Commercial and Industrial Stocks Exceeded Previous Year Levels

In December 2025, the national cotton market maintained ample resources with commercial inventories continuing to rise, surpassing the same period last year. Downstream order demand from textile enterprises remained resilient, with raw material procurement occurring on an as-needed basis, leading to stable yet increasing industrial inventories. By the end of December, national commercial cotton inventories reached 5.785 million tons, up 100,000 tons year-on-year and 1.101 million tons month-on-month. Industrial inventories held by textile enterprises stood at 984,000 tons, increasing by 14,000 tons year-on-year and 44,000 tons month-on-month.

V. Domestic Cotton Prices Continue to Rise; Domestic-Foreign Price Differential Widens

In December 2025, domestic cotton prices sustained upward momentum driven by market confidence boosted by macroeconomic policy expectations and concentrated year-end order deliveries in the textile sector. Prices peaked at 15,556 RMB/ton on December 31, marking the highest level since the start of the 2025 season. During the same period, global cotton prices fluctuated downward in the first half of the month due to ample global supply and weak U.S. cotton export data. They rebounded slightly in the latter half of the month driven by rising commodity prices. The China Cotton Price Index averaged 15,153 RMB/ton for the month, up RMB204 year-on-year and RMB 322 month-on-month. The Cotlook A Index averaged 74.1 cents per pound for the month, down 7.4% year-on-year and 1.5% month-on-month. After applying a 1% tariff, the equivalent price was RMB 12,93 per ton, RMB 2,215 lower than domestic cotton prices, with the price gap widening by RMB 535 compared to the previous month.

VI. 2026 National Intended Cotton Planting Area Shows Slight Decline Amid Stability

In December 2025, the China Cotton Association conducted its first 2026 cotton planting intention survey. Results indicate: - National cotton planting intentions totaled 44.386 million mu (2.96 million hectares), down 1% year-on-year. - Xinjiang: 40.54 million mu (2.63 million hectares), down 0.9% year-on-year. - Yangtze River Basin cotton areas: 1.251 million mu (83,400 hectares), down 4.2% year-on-year. while the Yellow River cotton-growing region recorded 2.19 million mu, a slight decrease of 0.2% year-on-year.

In Xinjiang, the overall cotton planting area showed a slight decline amid uncertainty over new planting policies and lower new-crop purchase prices. In inland regions, constrained by low purchase prices and reduced comparative returns from cotton cultivation, half of cotton farmers remain in a wait-and-see mode, leading to continued reductions in planting areas.

As an integrated internet platform providing benchmark prices, on January 29th, the SunSirs benchmark price for cotton was 15942.50 RMB/ton, an increase of 2.53% compared to the beginning of the month (15549.17 RMB/ton).

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