Market activity slowed before the Spring Festival, with domestic cotton prices fluctuating within a narrow range. During the holiday period, positive signals emerged in international markets, prompting risk-averse capital to return post-holiday and driving up domestic spot cotton prices. As of February 26, the settlement price for the main cotton futures contract on the Zhengzhou Commodity Exchange stood at 15,450 RMB/ton, up 550 RMB/ton or 3.69% from the end of last month. The National Cotton Price Index B, representing the market price of standard-grade ginned cotton in mainland China, reached 16,583 RMB/ton, an increase of 526 RMB/ton or 3.28% from the end of last month. The domestic-international price differential widened from 3,603 RMB/ton at the end of last month to 3,844 RMB/ton, continuing to hit its highest level in a decade.
Regarding the macroeconomic environment, China continues to prioritize stable growth and expanding domestic demand. The upcoming sixth round of Sino-US economic and trade consultations is expected to help stabilize bilateral relations. As the opening year of the 14th Five-Year Plan period, 2026 will see coordinated macroeconomic policies focused on stable growth and domestic demand expansion. The monetary environment will remain reasonably ample, with proactive fiscal policies creating favorable conditions for a smooth economic start and industrial operations. Industry consensus anticipates an annual GDP growth target of around 5%. According to the Ministry of Commerce on February 26, China and the U.S. will hold the sixth round of economic and trade consultations in the near future. This aims to jointly implement and uphold the consensus reached during the Busan meeting between the two heads of state and their February 4 phone call, helping to stabilize bilateral relations and create a relatively stable external environment for commodity trade.
Regarding supply and demand dynamics, cotton sales progress this year has been significantly faster than in previous years, with strong expectations for tighter cotton supply in the next marketing year. As of February 26, 2026, the national cotton sales rate for the 2025/26 season reached 69.5%, equivalent to 5.15 million tons sold—an increase of 1.85 million tons compared to the same period last year. Nationwide public inspections of cotton completed 7.48 million tons, up 14.3% year-on-year. Currently, imported cotton prices are approximately RMB 3,800 per ton lower than domestic cotton prices, boosting textile enterprises' willingness to purchase imported cotton. Domestic production is about to enter the critical preparation and sowing period for the new season. Influenced by factors such as Xinjiang's cotton planting area reduction policy, the industry has reached a consensus that domestic cotton supply will tighten in the new season. Against this backdrop, the implementation of the new target price policy and actual planting progress have become market focal points, as they will directly determine the extent of domestic cotton supply reduction in the coming year.
In the downstream market, textile production and sales maintained steady and positive momentum before the Spring Festival, with post-holiday resumption of work and production proceeding in an orderly manner. Before the Spring Festival, textile enterprises maintained high operating rates with ample raw material inventories. Production and sales of yarn and fabric remained well-coordinated, keeping overall inventory pressure manageable. According to data from the National Cotton Market Monitoring System, in February 2026, the national textile enterprise operating rate reached 88.2%, up 1.3 percentage points month-on-month. Industrial inventories stood at 894,000 tons, increasing by 3.8% month-on-month and rising for the fourth consecutive month. Yarn inventory decreased by 3.7 days month-on-month and 9.9 days year-on-year, marking six consecutive months of decline; fabric inventory decreased by 2.7 days month-on-month and 10.1 days year-on-year, marking three consecutive months of decline. After the Spring Festival, with the traditional peak consumption season for textiles approaching, enterprises are confident in production. Leading enterprises or those with sufficient orders resumed operations first, while small and medium-sized enterprises plan to resume operations in bulk after the Lantern Festival. Recently, Zhengzhou cotton futures prices have risen cumulatively by over 600 RMB/ton. Enterprises have tentatively raised cotton yarn quotations, but market acceptance of these price adjustments remains limited.
Key Conclusions
Overall, against the backdrop of declining global cotton planting areas and reduced production expectations, overseas end-consumer markets demonstrate resilience. Domestically, the textile industry is actively resuming production in anticipation of the peak season, increasing the likelihood of cotton prices fluctuating at elevated levels. However, persistently high domestic-international price differentials increase the likelihood of quota-free imports, constraining domestic cotton price gains. The domestic market is approaching a critical window for implementing target price policies and finalizing planting expectations, which may cause temporary price fluctuations.
As an integrated internet platform providing benchmark prices, on March 3, the SunSirs cotton benchmark price was 16,638.50 RMB/ton, a decrease of 0.01% compared with the beginning of the month (16,640.00 RMB/ton).
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