【Wdoodoo Weekly Cotton Report】Cotton: Drought fermentation in main production areas drives up cotton prices, while weak demand restricts space above

This week, cotton both inside and outside fluctuated and rose. CF01 closed at 17065 yuan/ton, up 325 yuan/ton month on month; National cotton 3128B closed at 17960 yuan/ton, up 415 yuan/ton month on month. The high temperature and dry weather continue to ferment, and Zhengzhou cotton has reached a new high in this stage.

1. Macro support tends to be bullish.

After the grace period for US Iran negotiations expired, the United States announced a new round of economic sanctions against Iran, causing a significant increase in energy and chemical products due to geopolitical premiums. The sudden announcement of long bond buybacks by US Treasury Secretary Vincent has greatly impacted the credit narrative of US bonds and the US dollar, with marginal improvements in liquidity benefiting commodities. Continue to pay attention to the impact of changes in long-term bond interest rates on US policy choices.

2. The weather disturbance continues to ferment.

High temperatures and droughts in cotton producing countries are the core driving force behind this round of price increases, with El Ni ñ o expectations providing long-term weather surges. The cotton drought in the United States continues to worsen, with 44% of cotton growing areas affected. The excellent growth rate of cotton is 38%, a year-on-year decrease of 17%, and the expectation of reduced production is rising; The rainfall in the cotton growing regions of India has decreased compared to the previous month. Although the planting area is basically the same as last year, the low precipitation during the same period has raised doubts about the yield; At present, the cotton growing areas in Xinjiang, China are gradually entering the period of boll opening. The continuous high temperature from June to August has led to an increase in the shedding of buds and bells, and the market is expecting a decrease in production of new cotton.

3. Selling and importing effectively replenish the supply of old works.

Reserve cotton shipments maintain 100% transaction volume, with 40200 tons sold this week. The average transaction price is 17422 yuan/ton, equivalent to a price of 18062 yuan/ton at a discount of 3128. The transaction price continues to rise. From July 20 to August 20, 2026, a total of 192500 tons of reserve cotton were listed, with a transaction rate of 100%. The weighted average transaction price was 17208 yuan/ton, equivalent to 3128B weighted transaction price of 17844 yuan/ton.

Reserve cotton wheel exports and imports effectively supplement the gap of old works, easing the expectation of tight supply-demand balance. Based on the current daily listing volume of 8000 tons of reserve cotton, a total of 420000 tons have been listed as of September 30th. In the fiscal year of 25/26 (2025.9, 2026.7), the cumulative import of cotton reached 1.53 million tons, a year-on-year increase of 530000 tons.

Commercial inventory continues to decrease, but overall it is higher than the same period last year. As of August 15th, the national commercial cotton inventory was 2.1982 million tons, a decrease of 301200 tons from the end of July and an increase of 378000 tons from the same period last year.

4. The demand side has slightly rebounded, but the strength is not significant yet.

Downstream production and sales have slightly rebounded, but terminal peak season orders are average. The operating rate of textile enterprises has slightly increased, while the inventory of finished products in yarn and fabric factories has decreased month on month. But with a focus on essential procurement, the willingness to proactively replenish raw materials is not strong, and cotton yarn is struggling to keep up with rising prices. Some transactions are made at a discounted price.

In July, domestic clothing retail fell year-on-year, with cotton yarn exports decreasing by 12% and cotton fabric exports decreasing by 14%. However, textile and clothing exports increased by 7.6% year-on-year,

Overall, in the short term, cotton prices are prone to rise but difficult to fall due to weather speculation driven by the worsening drought in the main production areas and the impact of El Ni ñ o. However, the demand performance during peak season is relatively weak, and it is expected that upward pressure will gradually increase. Zheng Mian01 is concerned about the pressure around 17500. In the medium to long term, global new cotton production is declining, and the supply-demand pattern is marginally tightening, with no significant drop seen below. Be cautious when placing multiple orders and focus on long positions with pullbacks. Options can be considered to sell on a bullish call or buy on a bearish call.