【Wdoodoo Weekly Cotton Report】Domestic & Foreign Cotton: Trading New Crop Planting; Zhengzhou Cotton Extends Gains Amid Rollover

April 16, 2026

WDD-Global

1138

Guide

Highlights at a glance

Zhengzhou cotton rebounded last week amid planting-season supply concerns, with CF09 and Cotton 3128B rising 309 and 220 yuan/ton respectively. Key drivers include severe US drought (98% of Texas in moderate+ drought), El Niño risks, Middle East conflict–driven input cost inflation, and Xinjiang’s planned 10% acreage cut over three years. Global production cuts are anticipated—Brazil (−280k tons), Australia (−17%), India (−2.4%). While demand remains supportive, textile mill operating rates and yarn orders show early signs of softening, suggesting cautious restocking. With supply-side pressures dominating near-term sentiment, ZCE cotton is expected to trade bullishly around 15,400 yuan/ton, though policy intervention (e.g., reserve sales) looms if prices surge.

Last week, Zhengzhou cotton edged lower before rebounding and completed the major contract rollover. CF09 closed at 15,705 yuan/ton, up 309 yuan/ton from the previous week, while Cotton 3128B closed at 16,630 yuan/ton, up 220 yuan/ton. Speculation over production cuts during the planting season has been the main theme in April.

1.The Middle East situation is unlikely to see a substantive resolution in the short term.

Last week, the US and Iran reached a tentative truce, but weekend peace talks ended without progress. President Trump stated that the United States would impose a blockade on the Strait of Hormuz, noting that what could not be secured on the battlefield will be even harder to achieve at the negotiating table. With the US accelerating military deployments, the US-Israel-Iran conflict faces risks of escalating beyond expectations.

As the Middle East remains mired in a cycle of simultaneous fighting and negotiations, the situation is evolving toward prolonged confrontation with periodic escalations in intensity, which will continue to impact crude oil production and shipping in the Persian Gulf. Due to the repricing of war risk insurance and the lag in restoring shipping order, commodity costs are expected to remain elevated for an extended period. However, forward-dated contracts may begin pricing in a recessionary narrative, warranting vigilance toward shifts in the futures term structure.

2. Expectations of reduced new-crop planting are the main focus of the current market.

The decline in Xinjiang cotton acreage is in line with market expectations; attention will be paid to subsequent target price subsidy policies. Local authorities aim to cut planting area by 10% over three years through measures including "designated banned planting areas, water resource control, and optimized subsidies".

Internationally, expectations of reduced new-crop planting are resonating globally. The probability of an El Niño event in 2026 is increasing. Across major US cotton-growing regions, the share of areas under moderate drought or worse has reached 70%, with severe drought or worse holding steady at a high 39%. Notably, 98% of Texas is under moderate drought or worse. The outlook for warm and dry conditions, compounded by existing severe drought, poses a significant adverse impact on US cotton spring planting and emergence in 2026.

Furthermore, the Middle East conflict has raised agricultural input costs, disrupting cotton planting. This coincides with the land preparation phase in major producers like the US and India, and the top-dressing stage for Brazilian cotton, fueling market concerns over damage to the new crop's yield.

According to market forecasts, Brazil's production for the 25/26 season could decrease by 280,000 tons, with ending stocks expected to decline. Australia's production may be cut by 17%, and India's cotton production by 2.4%.

3. Demand support remains, but marginal weakening is expected.

Textile mill operating rates slightly declined, raw material inventories decreased month-on-month, and spinners' yarn inventories rose marginally month-on-month, although total inventory levels remain low. Grey fabric operating rates continued to rebound, and fabric mills' finished goods inventories continued to fall month-on-month. Spinners reported that orders and sales for 40-count yarn remain decent, while other varieties show signs of slowing. Demand in April is expected to weaken marginally, leading to cautious restocking among textile enterprises. Despite robust cotton consumption amid high capacity, the demand side is more of a support factor rather than a driver given expectations of downstream weakness.

Overall, April welcomes the planting season speculation. Severe drought in the US, the ongoing Middle East conflict impacting new-crop planting expectations, and the materialization of reduced planting in Xinjiang, China, suggest that supply reduction drivers will likely dominate the market in the short term. However, with downstream demand gradually weakening in April and Northern Hemisphere planting acreage still uncertain, vigilance is required regarding potential policy controls should Zhengzhou cotton rally to high levels, such as state reserve sales or the issuance of additional import quotas.

ZCE cotton is expected to trade with a bullish bias around 15,400 this week, with potential for further upward shift in its trading range. The strategy is to buy on dips for rolling operations.

Key Focus This Week

The persistence of geopolitical conflicts in the Middle East.

Policies regarding Xinjiang cotton planting area for the new season.

Performance of end-demand.

【Wdoodoo Weekly Cotton Report】Zheng cotton remains sideways, awaiting the implementation of new-season planting.

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