Price trend

Last week, domestic cotton prices exhibited a trend of strong, fluctuating performance, bolstered by expectations of a reduction in cotton planting acreage. Meanwhile, international cotton prices continued their upward trajectory, driven by multiple bullish factors—including intensifying drought in major U.S. cotton-producing regions and persistently high oil prices. According to data from the SunSirs Commodity Market Analysis System, as of April 13, the spot price for domestic Grade 3128B lint cotton stood at 16,972 RMB/ton, marking a 1.01% increase compared to the beginning of the month.

Domestic Market: Supply Expected to Tighten; Consumption Forecast Upgraded

Supply Side: Clear Expectations of Medium-to-Long-Term Tightening

According to the cotton planting intention survey conducted by the China Cotton Association in March 2026, the intended cotton planting area nationwide for 2026 stands at 43.118 million mu—a year-on-year decrease of 3.8%, representing a decline that has widened by 3.3 percentage points compared to the previous survey period. Of this total, the intended planting area in Xinjiang is 39.516 million mu, down 3.4% year-on-year, accounting for over 90% of the national total intended area.

As the core production region accounting for over 90% of domestic cotton output, Xinjiang’s reduction in cotton cultivation acreage points directly to a decline in domestic cotton production for the 2026/27 marketing year. Multiple institutions project that the drop in domestic cotton output for the new season could range from 7% to 10%. This assessment creates a significant divergence in expectations compared to the USDA’s monthly report—which projected an upward revision in China’s output—making the logic of contracting domestic supply the dominant theme in the market.

Demand Side: Consumption Upgraded; Demand Support Was Clear

According to an April report by the Ministry of Agriculture and Rural Affairs, China's cotton consumption for the 2025/26 marketing year has been revised upward by 200,000 tons from the previous month's estimate, reaching 7.8 million tons. Correspondingly, end-of-period stocks have been revised downward by an equal amount, shifting the domestic cotton supply-demand landscape from a state of "looseness" to one of "tight balance."

As of April 9, the national cotton sales rate reached 84.2%, an increase of 17.7 percentage points year-on-year—a level significantly higher than that of the corresponding period in previous years. This performance is attributable to two main factors: on one hand, demand from the textile industry surged during the traditional peak season of "Golden March and Silver April"; on the other, rising costs for chemical fibers—driven by conflicts in the Middle East—further highlighted cotton's relative price advantage, thereby significantly boosting the purchasing enthusiasm of cotton spinning enterprises.

International Markets: Worsening Drought Drove Strong Rally in U.S. Cotton

Last week, the average settlement price for the benchmark New York cotton futures contract stood at 73.06 cents per pound—an increase of 2.59 cents per pound (or 3.7%) compared to the previous week. The primary driver behind this recent surge in ICE cotton futures has been the continued deterioration of drought conditions across the major U.S. cotton-producing regions; specifically, the core growing belt in Texas is now experiencing drought conditions classified as moderate or worse. This severe drought poses a direct threat to both the progress of new crop planting and the rate of seedling emergence. Consequently, the market has begun to question the yield forecasts presented in the USDA's monthly report, leading to intensifying expectations of a tightening supply of new-crop cotton.

Market outlook

In summary: Domestic cotton prices are trending firm, bolstered by expectations of a reduction in cotton-planting acreage. The country has now entered the peak period for spring cotton sowing; with temperatures rising steadily in recent days, the sowing progress in Xinjiang is generally running slightly ahead of the pace seen during the same period last year. It is projected that sowing operations across the entire Xinjiang region will be substantially completed between late April and the end of the month. Moving forward, key factors to monitor will be the impact of the cotton target price policy and weather fluctuations during the spring sowing season on market dynamics.

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