Since April, cotton prices have entered a sustained upward trend, with domestic and international spot and futures markets moving in tandem to exhibit an overall rising trajectory. Data from the SunSirs Commodity Market Analysis System indicates that as of May 6, the domestic spot price for Grade 3128B ginned cotton stood at 17,937 RMB/ton—an increase of 0.75% compared to pre-holiday levels. In the futures market, the closing price for the Zhengzhou Cotton benchmark contract on May 6 was 16,815 RMB/ton, marking a daily gain of 1.77%.

Despite the near-term trend leaning bullish, several core underlying concerns are accumulating, introducing uncertainty into the market outlook.

Global Supply and Demand Outlook: The May report from the International Cotton Advisory Committee (ICAC) forecasts that in the 2026/27 season, global cotton production will exceed consumption by approximately 700,000 tons. This shift in the market—from a tight balance to a state of oversupply—creates potential bearish pressure on forward prices.

Downstream Textile Enterprises Face Profit Pressure: The rapid surge in cotton prices has driven up raw material costs for textile manufacturers, severely squeezing their profit margins—to the point where some have even slipped into the red. Consequently, a number of textile firms have suspended procurement or scaled back their order intake, signaling a diminishing capacity among downstream players to absorb the high cost of cotton.

Uncertainty Regarding Weather Factors: Rainfall occurred in the primary U.S. cotton-producing regions on May 5. Should weather conditions continue to improve in the days ahead, expectations of reduced yields may subsequently diminish, thereby posing a risk of price correction.

Market Outlook

Overall, the cotton market is currently at a critical juncture characterized by intense contention between bullish and bearish forces. Positive signals on the supply side—specifically production cuts and weather-related disruptions—are driving short-term market trends; however, the absorptive capacity of demand and expectations of increased production in the future serve as effective constraints. In the short term, the market is expected to undergo "strong-biased consolidation" while awaiting fresh catalysts. From a medium-term perspective, the extent of improvement in downstream orders will be the decisive factor determining whether textile enterprises can sustain higher price levels and trigger the next upward market cycle.

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