Cotton prices rise nearly 4% in June, multiple positive factors inject momentum into industry development

Since June, domestic commercial inventory has continued to decrease, supported by tight supply and rigid downstream replenishment demand. Coupled with macroeconomic incentives, cotton prices have risen slightly. As of June 30th, the settlement price of Zheng cotton's main contract was 13815 yuan/ton, an increase of 4.1% month on month; The spot price of 3128B grade cotton has reached 15160 yuan/ton, with a monthly increase of 3.97%.

Supply side: Domestic tightening and international variables coexist

Domestic supply tightening: The domestic cotton supply side is showing a clear tightening trend. Data shows that the national commercial inventory continues to decline, with the total commercial cotton inventory dropping to 2.8799 million tons as of June 27, 2025. At the same time, the import volume has significantly decreased, with a cumulative import of 440000 tons of cotton from January to May 2025, a year-on-year decrease of 1.21 million tons, a decrease of as much as 73.5%. The cumulative import volume of cotton in China in 2024/25 is only 920000 tons, the lowest level in nearly seven years. These data indicate that the available circulating resources in the domestic cotton market have decreased, and the supply pressure has been alleviated to a certain extent.

In addition, from the perspective of planting situation, although the China Cotton Association announced that the national cotton planting area this year has reached 44.823 million mu and is growing well, the cotton planting area in Xinjiang has reached 40.9 million mu, a year-on-year increase of 3.3%. But with the continuous rise in temperature in Xinjiang, the growth progress of cotton has accelerated, and some cotton field pests have emerged. This has caused a disturbance to the expected new cotton production, leading to an increased wait-and-see attitude among some cotton companies and further affecting the market supply rhythm.

International supply variables: In the international market, the macro level is gradually recovering, the US dollar is falling, and the overall peripheral market is rising, which provides some support for cotton prices. However, the weekly crop growth report of the US Department of Agriculture shows that as of the week of June 22, 2025, the excellent rate of cotton in the United States was 47%, compared to 48% in the previous week and 56% in the same period last year. The growth progress of cotton in the United States is slow, the excellent rate is low, and the uncertainty of the impact of weather factors on cotton production has increased. In addition, the US Department of Agriculture is about to release a report on actual cotton planting area, and the market is highly concerned about the adjustment of US cotton supply expectations based on this data. The result may trigger significant fluctuations in the international cotton market.

Demand side: domestic weakness and complex international landscape

Domestic demand is sluggish: The domestic cotton yarn market continues to be sluggish, and the operating rate is slowly decreasing. As of June 27th, the operating load of mainstream textile enterprises was 71.2%, a decrease of 0.70% compared to the previous month. Insufficient terminal demand has led to a gradual increase in the accumulation rate of cotton yarn inventory. Recently, the prices of domestic cotton and polyester staple fibers have risen sharply, further exacerbating the operational difficulties of yarn mills. The spot price difference between yarn and cotton has decreased to the lowest level since the beginning of this year. Under the pressure of insufficient orders and production losses, some small and medium-sized enterprises have increased production restrictions or high-temperature holidays, which seriously suppresses domestic demand for cotton.

International demand is complex: Although the macro level of the international market has improved, the imbalance of global economic recovery still has a complex impact on cotton demand. On the one hand, the development of the textile industry in some emerging economies provides certain support for cotton demand; On the other hand, the demand recovery in traditional consumer markets such as Europe and America is still relatively slow, and the uncertainty of trade protectionism is also affecting the international cotton trade pattern, making it difficult for international cotton demand to see significant growth.

Future prospects

Short term fluctuations are predominant

In the short term, the tight supply of old cotton products in the cotton market will continue, and the support brought by weather fluctuations will also play a role for a certain period of time. However, the continuous upward trend of spot prices is facing significant pressure, with limited follow-up orders and weak willingness to replenish. Against the backdrop of gradually increasing cotton yarn inventory rate, the space for domestic cotton prices to continue to rise is relatively limited. It is expected that cotton prices will show a fluctuating trend in July, and the main contract for Zhengzhou cotton may fluctuate within a certain range. Investors need to closely monitor market supply and demand changes and macroeconomic dynamics.

Long term attention to new cotton and demand

In the long run, the production of new cotton will become the focus of market attention. If the new cotton production increases as expected, it will put significant pressure on market supply. Meanwhile, the improvement of terminal demand is also crucial. If demand continues to be weak, the situation of oversupply in the cotton market may intensify, and the risk of cotton price decline will increase. In addition, macroeconomic policies, international trade situation, and weather changes may have a significant impact on the cotton market. Relevant enterprises and investors need to manage risks, closely monitor market dynamics, and adjust their business and investment strategies in a timely manner.