Market Review

In April 2026, domestic and U.S. cotton prices followed a core trajectory characterized by an initial divergence, followed by a synchronized upward movement, and finally a late-month surge and consolidation phase. Market sentiment gradually shifted from earlier expectations of ample supply to a dynamic dominated by a tight balance; the price spread between domestic and international cotton continued to narrow, and a pattern of international strength coupled with domestic stability prevailed throughout the entire month.

According to the SunSirs Commodity Market Analysis System, as of April 28, the domestic spot price for Grade 3128B lint cotton stood at 17,759 RMB/ton—an increase of 5.7% from the beginning of the month. This rise reflects the market's rational pricing in response to improving fundamentals.

Futures market performance has shown a divergent yet strengthening trend. As of April 27, the benchmark Zhengzhou Cotton futures contract for the current month experienced significant volatility and surged sharply; its settlement price at month-end marked a 6.2% increase compared to the beginning of the month. Meanwhile, the ICE U.S. Cotton futures market—the key international benchmark—demonstrated an even more aggressive upward trajectory, with its overall gains significantly outpacing those of the domestic market. On April 27, the settlement price for ICE cotton futures stood at 79.58 cents per pound, reflecting a substantial cumulative increase of 12.5% ​​over the course of the month.

Domestic Market: Spot Market Pressure Eased; Expectations for New-Season Production Cuts Intensified

Supply Side: Old-Season Drawdown Accelerated as the Season Winds Down; New-Season Planting Area Contracted

Cotton processing operations in Xinjiang have been substantially completed; overall processing volumes remain at historically high levels, while the total volume of cotton circulating in the spot market is steadily tightening. As cotton enterprises continue to ship out inventory and spinning mills proceed with essential procurement, nationwide cotton stocks are undergoing a sustained drawdown. Production and sales figures show marked year-on-year improvements, and the temporary oversupply in the spot market is gradually easing. As of April 23, the national cotton sales rate reached 88.7%—an increase of 17.3 percentage points year-on-year and 20.7 percentage points above the four-year average—demonstrating that downstream demand has exhibited greater resilience than anticipated.

A survey conducted by the China Cotton Association in March 2026 indicates that the nationwide intended cotton planting area stands at 43.118 million mu—a year-on-year decline of 3.8%, representing a 3.3-percentage-point widening of the contraction compared to the previous period. Of this total, the intended planting area in Xinjiang is 39.516 million mu, down 3.4% year-on-year and accounting for over 91% of the national total. The declines were even more pronounced in the cotton-growing regions of the Yangtze River Basin (1.102 million mu, down 15.6% year-on-year) and the Yellow River Basin (2.081 million mu, down 5.1% year-on-year), reflecting a continued waning of enthusiasm for cotton cultivation in China's interior regions. Compounded by increased uncertainty regarding spring weather conditions, market expectations for a reduction in cotton output for the new crop year are steadily intensifying; consequently, the domestic cotton supply-demand balance—viewed from a medium-to-long-term perspective—is shifting from a state of relative looseness to one of tight equilibrium, thereby providing sustained underlying support for cotton prices.

Demand Side: Traditional Peak Season Effects Persisted; Cotton's Relative Price Advantage Became Prominent

The downstream textile market continues to operate soundly, with the "Golden March and Silver April" peak season effect continuing to unfold. Overall operating rates among textile enterprises remain stable, and steady demand-driven orders for cotton yarn and grey fabric are being released. Influenced by rising chemical fiber costs—driven in turn by conflicts in the Middle East—the relative price advantage of cotton has become even more pronounced, leading to a marked increase in purchasing enthusiasm among cotton spinning enterprises.

Faced with the sustained rise in raw cotton prices, the downstream market has shown only reluctant acceptance of the price hikes; with new orders remaining limited, yarn mills are generally maintaining a cautious stance regarding order acceptance. Textile enterprises are widely adopting strategies of placing small orders to replenish inventory and purchasing solely to meet immediate operational needs, avoiding any concentrated stockpiling or forward-buying actions—a stance that reflects a rational and restrained approach toward high-priced raw materials.

International Markets: U.S. Cotton Drought Crisis Intensified; Production Cut Expectations Soared

This month, the primary driver of U.S. cotton market dynamics has centered on risks associated with the planting of the new crop; specifically, the persistent severe drought in Texas—the core U.S. cotton-producing region—has served as the key catalyst propelling ICE U.S. cotton futures steadily upward.

According to data from the U.S. Drought Monitor (USDM) and the USDA, as of April 21, 98% of U.S. cotton-producing areas were experiencing drought conditions. This represents a drastic increase compared to the 21% recorded during the same period last year, marking the highest level for this time of year since records began in 2000. Market expectations regarding downward revisions to new-crop U.S. cotton yields and rising abandonment rates continue to intensify, while concerns over yields—triggered by surging fertilizer prices—have further exacerbated market anxiety.

Market outlook

From the perspective of supply and demand dynamics, a state of tight equilibrium has gradually become established in the global cotton market. Reduced cotton yields in the new season—coupled with the frequent occurrence of extreme weather events—remain the core bullish factors in the medium to long term, lending resilience to the floor of cotton prices.

Overall, the supply and demand landscape in April has set a firm underlying tone for cotton prices; however, the sluggish recovery in downstream consumption is expected to cap potential gains. Moving forward, market trends will continue to revolve around the interplay between expectations of tightening supply and the actual warming of consumer demand. In the short term, both domestic and international cotton prices are expected to maintain a pattern of high-level volatility. Drought conditions affecting U.S. cotton crops will remain a central focus for the market; should the drought persist, cotton prices may continue to trade at elevated levels, whereas an improvement in weather conditions could subject prices to pressure for a temporary correction.

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