Price trend

According to the commodity market analysis system of SunSirs, as of February 26, the spot price of 3128B grade cotton closed at 16,681 RMB/ton, up 2.99% from the beginning of the month and up 3.57% from before the holiday.

Market analysis

In February, domestic cotton prices broke away from the narrow range of fluctuations seen before the Lunar New Year and experienced a significant upward trend, mainly driven by the following three positive factors:

I. Domestic supply contraction and policy support created a resonance

In late February, with only about a month left before the new cotton planting season in China, expectations of reduced planting area and target price policies gradually became the main theme of the market. The No. 1 Central Document of 2026 explicitly proposed "improving the cotton target price policy" to promote the stable development of the industry, marking the beginning of a new round of optimization for this policy while maintaining stability. Internal expectations of supply contraction and policy support resonated, providing solid support for cotton prices.

II. USDA report signals tightening global supply and demand

The USDA's 2026 Agricultural Outlook Forum provided its first forecast for new season production, reinforcing market expectations of global production cuts. Coupled with better-than-expected US cotton exports, ICE cotton futures rebounded. As of February 25, the settlement price of the ICE cotton May contract rebounded to 66.17 cents per pound, a new high since the end of September last year, providing external impetus for the rise in domestic cotton prices.

Global cotton production in 2026/27 is projected to decline by 3.2% year-on-year to 25.26 million tons, while consumption is expected to increase by 1.2% year-on-year, and ending stocks are expected to decrease by 5.2% year-on-year. The widening supply-demand gap is supporting an upward shift in cotton prices.

Looking at data by country, China's production is estimated at 6.97 million tons (down 8.6% year-on-year), consumption at 8.56 million tons (up 0.8%), and ending stocks at 7.84 million tons (down 1.0%); the United States' production is estimated at 2.96 million tons (down 2.3%), and ending stocks at 910,000 tons (down 4.5%).

III. Marginal improvements in tariff policies are beneficial to textile exports.

On February 24, the United States began imposing a temporary 10% global import tariff, lower than the previously announced 15%. In terms of actual tax burden, the cancellation of the old tariff and the implementation of the new tariff create a "one decrease, one increase" situation, resulting in a decrease in the overall level of US tariffs on China, which is marginally beneficial to China's textile and apparel exports. The market generally expects this to drive a recovery in exports to the US, thereby boosting long-term demand expectations for upstream cotton raw materials.

Market Outlook: Shifting from Expectation-Driven to Demand-Validated

The strong performance of cotton prices in this round was the result of multiple positive factors both domestically and internationally. However, with the Spring Festival just over, the market was still in a critical observation period of "transition from expectation to reality." Although textile companies resumed work faster than expected after the holiday, laying a good foundation for demand recovery, the quality of orders during the traditional peak season of "Golden March and Silver April" has not yet been fully verified, and the actual strength of downstream demand remains uncertain.

Currently, the core driving logic of the cotton market is gradually shifting from an expectation-driven phase dominated by macroeconomic forecasts and policy dividends to a fundamental phase driven by actual demand verification. In the short term, the market's focus will be heavily concentrated on the sustainability of post-holiday production resumption, the quantity and structure of new orders, and the digestion of inventory in the industrial chain. It is necessary to be wary of adjustment pressures caused by expectation discrepancies.

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