【Wdoodoo Weekly Cotton Report】Domestic & International Cotton Rally Together, Focus on U.S. Cotton Drought and Actual Acreage

Last week, Zhengzhou cotton trended lower before rebounding. The CF09 contract closed at 15,935 yuan/ton, up 230 yuan/ton week-on-week. Cotton 3128B index settled at 16,950 yuan/ton, up 320 yuan/ton week-on-week. Speculation on new-crop output reduction dominated the April market. Going forward, focus remains on U.S. drought conditions and changes in actual cotton planting area in Xinjiang.

1.Middle East tensions remain volatile, with no substantial improvement expected in the short term.

Last week, a framework for U.S.-Iran negotiations was nearly reached. However, due to complex stakeholder interests, the Strait of Hormuz, which had been temporarily opened, was blocked again over the weekend. This Wednesday marks the ceasefire deadline set by Trump. U.S. military deployment is accelerating, raising the risk of an unexpected escalation in the U.S.-Israel-Iran conflict.

The Middle East is in a state of fighting while negotiating, evolving toward prolonged confrontation with periodic intensification. This continues to disrupt crude oil production and cargo transportation in the Persian Gulf. With war risk insurance repricing and delays in restoring shipping order, spillover effects on related commodities are expected to persist.

2.Expectations of lower new-crop supply remain the market’s main focus.

The Northern Hemisphere has entered the cotton planting season. Major U.S. cotton regions are under moderate to severe drought, with coverage exceeding 90% in key areas such as Texas. Amid the critical spring planting and seedling stage, the market expects a 5–8% production cut for U.S. cotton in 2026/27, driving international cotton prices higher.

Domestically, sandstorms and rainfall temporarily disrupted planting progress. Cotton acreage in Xinjiang is being reduced under policy guidance; the actual decline has been milder than expected. May will be the verification period for real planting conditions.

Meanwhile, rising agricultural input costs due to the Middle East conflict have disrupted cotton planting, stoking concerns over new-crop yield losses. Market forecasts suggest a 280,000-ton production cut in Brazil for 2025/26 and a decline in ending stocks. Australia’s output may be revised down by 17%, and India’s cotton production by 2.4%.

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

Last week, cotton purchases by textile enterprises were sluggish. Downstream participants worried about seasonally weakening demand and showed low acceptance of high cotton prices.

Nevertheless, overall operating rates stayed stable. Finished goods inventories fell both YoY and MoY, hitting historical lows for the period. High operating rates kept total cotton consumption elevated, maintaining a tight supply-demand balance and strong downstream support for cotton prices.Retail sales of textiles, clothing and footwear in March rose 7% YoY.In January–March 2026, cumulative textile and apparel exports reached $67.08 billion, up 1.2% YoY.

Overall View,April has brought the planting-season speculation rally. Severe drought in the U.S. plus expectations of reduced output in Xinjiang have driven a sharp, position-building rally across both domestic and international cotton markets.

However, May is the period for confirming actual planting acreage. Risks of bullish expectations being disproven at elevated price levels warrant caution, including potential policy measures such as state reserve releases or increased import quotas.

The medium-to-long-term bullish view is maintained, but with no fresh bullish catalysts in the short term, chasing highs is not recommended. Zhengzhou cotton is expected to oscillate with a bullish bias around 15,500 support this week, favoring dip-buying and rolling long strategies.

Key Focus This Week

1.The persistence of geopolitical conflicts in the Middle East;

2.Policies on Xinjiang cotton planting area for the new season;

3.End-demand performance.