Domestic Cotton Spot Market Situation

On September 29, domestic spot prices declined. The average price for domestic 3128-grade cotton (Cotlook B Index equivalent) stood at 17,315 RMB/tonne, down 105 RMB/tonne from the previous trading day. The quote for Xinjiang 3128B-grade cotton delivered to factories in Shandong fell by 110 RMB/tonne to 17,390 RMB/tonne. The national cotton basis index (CNCottonJ, linked to CF2701 futures) dropped by 12 RMB/tonne to 840 RMB/tonne. The M Index for imported cotton arriving at ports rose slightly by 0.14 cents/lb to 92.39 cents/lb; calculated import costs were 15,215 RMB/tonne at the 1% tariff rate and 15,411 RMB/tonne under the sliding-scale tariff regime (excluding port miscellaneous fees).

Purchase prices for Xinjiang seed cotton continued to edge upward; between September 25 and 28, prices in production areas such as Bozhou, Jinghe, Kuitun, and Shihezi rose by approximately 0.10 RMB/kg. The prevailing purchase price for machine-picked seed cotton—with moisture content under 13% and a lint turnout of 37–38%—reached 7.30–7.40 RMB/kg. Some enterprises offered 7.50 RMB/kg for seed cotton with a lint turnout exceeding 38.5%, while posted purchase prices of 7.20 RMB/kg or lower have essentially disappeared.

Market participants remain cautious regarding the total Xinjiang cotton output for the 2026/27 crop year, refraining from making hasty predictions of a production decline. The plots harvested early were primarily early-maturing varieties; the top bolls were underdeveloped, individual boll weights were under 5 grams, and the proportion of "dead-lock" cotton (fibers that fail to fluff out) was high. Significant yield losses were concentrated in areas with tight water supplies, whereas cotton fields with ample water and vigorous growth have not yet undergone large-scale harvesting. Meanwhile, the moisture content of seed cotton in Northern Xinjiang generally ranges from 10% to 15% this year; compared to the 15%–20% moisture levels seen during the same period last year, actual output calculations must account for this moisture difference. Local agricultural authorities and cooperatives are advising farmers to harvest at night to moderately increase seed cotton moisture levels, thereby balancing farmers' profits with lint quality.

Pressure on the harvesting stage has intensified; the time gap between the Northern and Southern Xinjiang harvests has shrunk to just 3–5 days, meaning the usual practice of Northern Xinjiang cotton pickers moving south to assist Southern Xinjiang will be significantly curtailed. Compounded by rising fuel and labor costs, cotton harvesting fees in Northern Xinjiang have generally risen to 160–180 RMB per mu, with some areas exceeding 200 RMB per mu. Although the total inventory of cotton pickers across Xinjiang exceeds 10,000 units, harvesting performance varies, and—coupled with market concerns about an early frost—demand for cotton pickers continues to outstrip supply. Downstream, textile enterprises report limited new orders and weak spinning margins, resulting in low willingness to restock. With the release of state cotton reserves nearing its end and the mass arrival of new cotton on the market, the tug-of-war between farmers and processing plants is intensifying.

International Cotton Spot Market Situation

The Indian market has become a key variable in the international cotton landscape. Rumors suggest the Indian government may extend its cotton import tariff exemption policy until December 31; domestic textile associations are even calling for the permanent abolition of the 11% import tariff to stabilize cotton prices, ensure raw material supplies for spinning mills, and boost the export competitiveness of textile products. Industry analysts consider an extension of the tariff exemption highly likely, citing four supporting factors:

First, domestic cotton supplies in India are expected to tighten between September and December, necessitating imports to bridge the gap. The Cotton Corporation of India (CCI) has depleted the majority of its cotton stocks acquired under the Minimum Support Price (MSP) scheme during the previous season, with remaining inventories falling below 250,000 tonnes.

Secondly, the gap between India's cotton production and demand is widening for the 2026/27 season. While planting acreage remains largely unchanged from last year, persistent high temperatures and drought conditions caused by El Niño have delayed crop growth and boll opening. This has created significant uncertainty regarding both yield and quality, making it difficult to meet the raw material needs of domestic textile manufacturers.

Thirdly, the divergence between domestic and international cotton prices has enhanced the cost-competitiveness of imported cotton. In September, ICE cotton prices experienced a sharp correction—with the benchmark contract falling nearly 13.9%—whereas Indian domestic prices dropped only about 4%. Consequently, the superior value proposition of cotton from Brazil, the US, and West Africa has prompted spinning mills to shift their purchasing toward imports.

Fourthly, the implementation of foreign trade agreements has driven a steady rise in textile and apparel exports since July, further expanding the demand for raw materials.

Regarding US growing regions, forecasts predict heavy rainfall over the next two weeks in Texas and the Southeast. As the crop is currently in the boll-opening stage, this rainfall could disrupt harvesting operations and provide support for US spot cotton prices; however, a strengthening US dollar may limit the potential for price increases. Currently, the US cotton crop shows a 70% boll-opening rate and 17% harvest completion, with overall progress running ahead of the historical average for this time of year.

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