SunSirs: Domestic and International Cotton Prices Were Diverging, and Domestic Cotton Prices Were Fluctuating with a Downward Bias

Price trend

Last week, the cotton market exhibited a marked divergence between domestic and international trends. Domestic cotton prices trended lower amidst volatile trading, while international cotton prices continued their upward trajectory, bolstered by a confluence of bullish factors. Consequently, the price spread between domestic and international markets narrowed significantly, resulting in a complex and fluctuating market landscape. According to the SunSirs Commodity Price Analysis System, as of April 7, the spot price for Grade 3128B ginned cotton stood at 16,731 RMB/ton, marking a weekly decline of 0.52%.

Domestic Market:

Supply Side: The volume of newly harvested domestic cotton inspected and certified has now exceeded 7.6 million tons. The overall supply landscape in the spot market remains ample, providing fundamental support for cotton price movements. Meanwhile, processing activities have largely drawn to a close; according to data from the National Cotton Market Monitoring System, as of April 2, the national cotton processing rate reached 99.8%. This figure remains on par with the same period last year and represents a 0.2 percentage point increase over the average of the past four years, indicating that processing capacity has been fully utilized.

On the sales front, data indicates an accelerated pace of market destocking; the national cotton sales ratio stands at 81.3%, representing a substantial year-on-year increase of 16.7 percentage points—and a rise of 20.3 percentage points above the four-year average. While this high sales ratio has, to some extent, alleviated inventory pressure, it has not fundamentally altered the overall landscape of ample spot market supply.

Demand Side: The performance of the downstream textile industry fell short of expectations, and the impact of the traditional peak season has somewhat diminished. Market conditions for cotton yarn have softened slightly, and the pace of transactions and shipments for finished cotton products has slowed noticeably. Although the overall operating rate among textile enterprises remains stable, raw material procurement is currently driven primarily by immediate replenishment needs, with little inclination toward large-scale stockpiling. Operating rates at some inland enterprises have declined, trading activity for standard cotton yarn varieties has waned, and the overall market trading atmosphere has become subdued; the weakness in downstream demand has emerged as the primary factor weighing on domestic cotton prices.

International Markets:

International cotton prices have demonstrated a strong upward trend, driven by the combined force of multiple bullish factors that have propelled prices to consistently higher levels. In the United States, the intended cotton acreage for 2026 stands at 9.64 million acres—a year-on-year increase of 4%—exceeding market expectations. On the trading front, demand has proven exceptionally robust. According to the latest statistics, during the week of March 20–26, U.S. upland cotton export commitments reached 84,300 tons—a substantial 94% surge compared to the average of the preceding four weeks. This explosive, short-term surge in demand has emerged as a key catalyst for boosting international cotton prices.

Furthermore, factors such as intensifying drought in major producing regions and surging international oil prices have converged to drive international cotton prices even higher. Last week, the average settlement price for the benchmark New York cotton futures contract stood at 70.47 cents per pound—an increase of 2.10 cents per pound from the previous week—marking a gain of 3.1% and clearly demonstrating the strong upward momentum of international cotton prices.

Market outlook

In summary: Weather conditions across the Xinjiang production region are currently generally favorable, and spring cotton sowing has already commenced in various local areas, marking the official entry of the domestic new cotton crop into its optimal planting window. Commercial cotton inventories remain at elevated levels, while spot market basis trends have held steady. Downstream demand during the peak season has shown signs of softening, with textile order volumes experiencing a slight decline; consequently, the market is expected to continue fluctuating within a narrow range in the short term. Moving forward, close attention must be paid to how factors such as the actual fulfillment of downstream orders, shifts in the macroeconomic environment, and weather conditions in the production regions may impact market dynamics.

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