SunSirs: Cotton Prices Rose Recently due to Positive Supporting Factors

Price trend

According to SunSirs' commodity price analysis system, as of January 9th, the spot price of 3128B grade raw cotton was 15,930 RMB/ton, a 2.45% increase compared to the beginning of the month.

Market Analysis

Recently, the domestic cotton market has performed strongly. On January 8th, the price of the main Zhengzhou cotton futures contract broke through the 15,000 RMB/ton mark, reaching a high of 15,095 RMB/ton, the highest level in nearly a year and a half. However, it also encountered strong resistance, and the price fell slightly on January 9th. Since the New Year, both spot and futures prices for cotton have shown a good upward trend, with the overall price level rising. Cotton processing enterprises were generally adopting a strategy of maintaining high prices, resulting in a market characterized by stable volume and firm prices.

Due to weak export sales data, ICE US cotton continued its downward trend. The market was focused on next week's USDA supply and demand forecast, and based on recent market feedback, this year's US cotton production may be slightly revised down

The rising upstream cotton prices stand in stark contrast to the profitability challenges faced by downstream textile companies. As of January 9, the textile industry was in its seasonal off-season, and companies had weak bargaining power, leading to profits concentrating at the upstream end of the supply chain, while profits in the downstream processing segment were continuously squeezed. Cotton yarn market prices remained generally stable, with some localized price increases, but the increases were small, and sales of medium and low-count yarns were still slow, making further price increases difficult. Textile companies were only making small, necessary purchases of cotton for inventory replenishment, and their enthusiasm for stocking up was low.

Market Outlook

The main factors driving the recent strong upward trend in cotton prices were the expected significant reduction in domestic supply in 2026 and the resilience of demand driven by consumption policies. However, upstream price increases had not been effectively passed on to downstream sectors, leading to escalating conflicts between upstream and downstream players in the supply chain. While cotton prices may face a correction after reaching a peak, current support is relatively strong, limiting the potential for significant declines.

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