Market Confidence Improves, Domestic Cotton Prices Extend RallyChina Cotton Situation Monthly Report (January 2026)

February 28, 2026, 5:22 PM

China Cotton Association

Guide

Highlights at a glance

Market confidence has strengthened, driving domestic cotton prices higher in January 2026. According to the China Cotton Situation Monthly Report, improved demand expectations, stable policy support, and tighter near-term supply dynamics contributed to the extended price rally. Inventory levels remain moderate, while textile mill purchasing activity picked up, reflecting renewed optimism in downstream consumption. Export orders showed modest improvement, though global competition and logistical uncertainties persist. The report notes that planting intentions for the upcoming season are cautiously optimistic amid favorable weather forecasts and sustained government subsidies. Overall, the domestic cotton market exhibits resilience and upward momentum, supported by both fundamental and sentiment-driven factors.

2026 marks the opening year of the 15th Five-Year Plan period. The Central Economic Work Conference listed "upholding a domestic demand-led strategy and building a strong domestic market" as a key annual economic task. Supported by policies, domestic cotton consumption remained stable, textile industry orders recovered, operating rates in major production areas stayed at a high level, enterprises actively restocked before the holiday, and yarn and grey fabric inventories were optimized, driving up domestic cotton prices. Meanwhile, international cotton prices fluctuated at low levels due to loose global supply, the price gap between domestic and imported cotton continued to widen, and the price competitiveness of imported cotton and cotton yarn was significantly enhanced.

The China Cotton Association (CCA) forecasts the 2025/26 cotton season as follows:

National cotton output: 7.278 million tons, up 9.2% year on year
Cotton imports: 1.10 million tons, up 4.5% year on year
Cotton consumption: 8.10 million tons, up 3.8% year on year
Ending stocks: 10.116 million tons, up 2.7% year on year

I. Optimized Yarn & Grey Fabric Inventories; Prices Rise with Cotton

The release of pre-holiday restocking demand and the implementation of pro-consumption policies improved the production and sales of the textile industry, with operating rates remaining high and finished product inventories decreasing. By the end of January, the yarn inventory of textile enterprises was about 20 days, a reduction of 3-4 days from the previous month; the grey fabric inventory was around 32 days, a month-on-month decrease of 1-2 days.

In terms of prices, driven by the transmission of domestic cotton price increases and pre-holiday stocking demand from downstream garment and fabric enterprises, the average monthly price of domestic 32-count pure cotton yarn was 21,314 yuan/ton, up 201 yuan year on year and 413 yuan month on month.

II. Purchases Near Conclusion; Inspection Volume Reaches 7.26 Million Tons

National seed cotton purchasing gradually concluded in January, and seed cotton prices rebounded driven by the rise in lint cotton prices. The national average monthly purchase price of seed cotton was 5.99 yuan/kg, up 3.3% year on year and 5.5% month on month.

Seed cotton sales in inland areas were basically completed, with a progress of 97.1% by January 31, 8.9 percentage points faster than the same period last year. Processing and inspection entered the final stage: a total of 1,099 cotton processing enterprises nationwide conducted notarial inspection, with a cumulative inspection volume of 7.262 million tons, including 1,018 processing enterprises in Xinjiang (inspection weight of 7.166 million tons) and 81 processing enterprises in inland areas (inspection weight of 95,000 tons).

Meanwhile, 227 enterprises in Xinjiang obtained 14,000 "High-Quality 'Sustainable Cotton' Trademark Use Certificates", involving 570,000 tons of lint cotton.

III. Commercial Stocks Slightly Up YoY; Industrial Stocks Steady with a Mild Rise

With most new cotton on the market, market supply remained sufficient. Pre-holiday restocking by textile enterprises drove moderate consumption of raw materials, and commercial stocks were basically flat month on month. By the end of the month, national cotton commercial stocks were 5.789 million tons, an increase of 42,000 tons year on year and 4,000 tons month on month. The industrial inventory of cotton in textile enterprises ranged between 900,000 and 1 million tons, a slight rebound from the previous month.

IV. Domestic Cotton Prices Continue to Rise; Domestic-Import Price Gap Further Widens

Multiple positive factors supported the upward trend of domestic cotton prices. The central bank's accommodative monetary policy orientation and textile enterprises' restocking demand jointly boosted market confidence. The average monthly China Cotton Price Index (CCIndex 3128B) was 15,884 yuan/ton, up 1,162 yuan year on year and 731 yuan month on month, closing at the highest point of the month at the end of the month.

The international market showed a weak and stable trend. Affected by factors such as rising global commodities, reduced cotton planting area in the Southern Hemisphere and weak downstream demand, the average monthly Cotlook A Index was 74.5 cents/pound, down 4.7% year on year and up 0.6% month on month. Converted to a 1% tariff price, it was 12,957 yuan/ton, 2,927 yuan lower than domestic cotton prices, and the price gap widened by 711 yuan from the previous month, with the price advantage of imported cotton continuing to emerge.

V. 2026 National Planting Intention Decline Narrows

The second cotton planting intention survey by the China Cotton Association shows that the national intended cotton planting area in 2026 will be 44.583 million mu, down 0.5% year on year. Among them, Xinjiang is 40.831 million mu, down 0.2% year on year; the Yangtze River Basin cotton area is 1.261 million mu, down 3.5% year on year; the Yellow River Basin cotton area is 2.084 million mu, down 5% year on year.

In Xinjiang, as the new round of target price levels and detailed implementation rules for planting area adjustment have not yet been clarified, the enthusiasm of some cotton farmers has slightly declined compared with last year, and the intended planting area still decreased slightly. However, the continued improvement of the cotton target price policy in the No.1 Central Document has boosted planting confidence, coupled with the continuous rise of domestic spot prices, the decline has narrowed compared with the previous period. In inland areas, affected by the decline in cotton planting income and the adjustment of cultivated land structure in some areas, most cotton farmers maintained a wait-and-see attitude, and the cotton planting area continued to decrease.

Ended

Tight Supply and Demand Support Cotton Prices, Strong Synchronous Rally at Home and Abroad

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