The overall view leans bearish, as cotton lacks sufficient upward momentum and remains under short-term pressure from macroeconomic factors and negative feedback in the downstream sector, keeping prices in a weak range, with the key focus on new crop purchase prices.

ICE cotton also remains weak, mainly because the latest round of consultations did not mention purchasing American cotton, creating a gap between expectations and reality.

Although the US$30 billion reciprocal tariff reduction list includes cotton, imports of American cotton are still constrained by quotas and the cost-effectiveness of US cotton, and non-commercial long positions may exit after expectations are dashed, creating downward pressure on ICE cotton.

Spot Market Conditions: Neutral

Spot sales are diverging, with significant differences in basis spreads.

The key focus is on new crop purchase prices, which will influence the center of cotton price fluctuations in the fourth quarter.

Imported Cotton and Yarn: Neutral to Bearish

Cotton inventory in bonded zones that has not cleared customs remains at a relatively high level.

China imported 80,000 tonnes of cotton and 180,000 tonnes of yarn in August, and imported cotton yarn inventory has rapidly accumulated to a historic high.

Cotton-Related Policies: Neutral

On July 14, the state officially released the 2026 reserve cotton sales policy, and the reserve auction policy was implemented.

On September 25, China National Cotton Reserves Corporation announced that reserve cotton sales would stop from September 30, with cumulative transactions of 409,000 tonnes.

Industry Chain Inventory: Bearish

Textile operating rates have declined, finished goods inventories are accumulating, and cotton yarn inventory has risen to a relatively high level.

Major Cotton-Producing Countries: Neutral

1) Xinjiang's new crop has entered the harvesting period, and the market still has significant disagreement over the extent of the decline in Xinjiang cotton yields per unit area.

In some areas, the per-unit yield decline is quite pronounced, and purchase prices are fluctuating in the short term, currently at a weighted average of around 7.2–7.3 yuan/kg.

Due to the decline in futures prices, purchase prices may also move lower.

2) In the United States, the new crop boll-opening rate is 70%, the harvest rate is 17%, the excellent and good rate of the new crop continues to deteriorate, and the inspection progress of the new crop is 4.7%.

Rainfall during the harvest period in cotton areas is unfavorable for new crop quality.

3) Indian cotton prices have corrected, and the CCI auction reserve price has also been lowered accordingly.

The cotton import tax exemption policy may be extended to the end of 2026.

4) Brazil's new crop cotton harvest has been completed, and Brazilian domestic institutions have raised production to more than 4.14 million tonnes, disproving the earlier expectation of a Brazilian production decline.

End-Use Consumption: Neutral

US clothing retail and wholesale sales grew year-on-year in August, and the inventory-to-sales ratio is at a low level, but the consumer confidence index has declined again.

In August, major textile and apparel exporting countries showed mixed export performance, but overall performance was better than in the first half of 2026.

China's domestic apparel retail sales recorded negative growth for two consecutive months in July and August.

Macro Level: Neutral to Bearish

In mid-September, the Federal Reserve announced a 25 basis point rate hike to 3.75–4.00%, with an overall hawkish tone, and the market believes there will be at least one more rate cut in the fourth quarter.

From September 20 to 23, China and US trade representatives held the eighth round of consultations in the United States, finalizing and publishing the US$30 billion reciprocal tariff reduction list of affected goods.

Among them, cotton is on China's import tariff reduction list, but cotton textiles and apparel are not on the US import tariff reduction list.

01. Watch the China-US Agricultural Working Group Meeting at Year-End

China-US trade — watch the China-US Agricultural Working Group meeting at year-end.

Key focuses for the fourth quarter of 2026: On November 3, 2026, the US midterm elections will be held, with all 435 House seats up for re-election and about one-third of the 100 Senate seats (more than 30 seats) up for election.

From November 18 to 19, 2026, Shenzhen will host the 2026 APEC Economic Leaders' Meeting.

From December 14 to 15, 2026, Miami in the United States will host the 2026 G20 Leaders' Summit.

At the end of 2026, the Agricultural Working Group under the China-US Trade Council will hold its first meeting.

How much tariff currently applies to China's cotton textile industry chain?

Tariffs on China's textile and apparel exports to the United States: base commodity tariffs plus additional tariffs from the Trump 1.0 era (7.5%–25%) plus the Trump 2.0 era (12.5%, the additional tariff under the Section 301 investigation imposed on July 24, 2026, citing imports of forced labor goods).

Possible: a second Section 301 investigation on the grounds of exporting excess capacity, adding an additional 7.5% tariff.

Confirmed: the US tariff reduction list for China almost does not include cotton textiles and apparel.

Current tariffs on China's imports of US cotton: 11%, including the 1% in-quota cotton import tariff plus additional tariffs from the Trump 1.0 era (0% if exclusion is applied for) plus the Trump 2.0 era (maintaining a 10% provisional reciprocal tariff).

Confirmed: additional tariffs on some imported US agricultural products have been cancelled (the US$30 billion tariff reduction list includes cotton).

Data source: China Ministry of Commerce, US White House, US Trade Representative's Office.

02. China: Reserve Sales End, Focus on New Crop Purchase Pricing

USDA expectations for China's cotton balance sheet.

Chinese domestic institutions have raised expectations for China's consumption and cotton imports.

Reserve rotation policy: reserve cotton sales stopped at the end of September.

From July 20 to September 29, cumulative reserve cotton transactions reached 409,000 tonnes.

2026 reserve cotton sales have ended, with cumulative listing of 412,000 tonnes and cumulative transactions of 409,000 tonnes, for an average transaction rate of 99.25%.

Among them, US cotton: 235,700 tonnes transacted (151,900 tonnes from the 2020 crop and 20,900 tonnes from the 2021 crop); Brazilian cotton: 96,400 tonnes transacted (75,900 tonnes from the 2019 crop and 83,400 tonnes from the 2021 crop); Xinjiang cotton: 76,900 tonnes transacted (all from the 2019 crop).

The weighted average sales transaction price was 17,191 yuan/tonne, equivalent to 17,851 yuan/tonne for the 3128B standard grade, with an average premium/discount of -659 yuan/tonne.

The weighted average transaction price of imported cotton was 17,236 yuan/tonne, while the weighted average transaction price of Xinjiang cotton was 16,997 yuan/tonne.

Industrial and commercial inventories: in mid-September, non-bonded inventory was 210.32, up 35.0 year-on-year and down 21.3 from the end of August.

The amount of business cotton in Xinjiang warehouses is 110,000 tonnes higher than the same period last year.

Outbound Xinjiang highway freight rates have risen.

Zhengzhou Commodity Exchange, Dadi Futures Research Institute.

Weather: precipitation is above normal in central and eastern China, while Xinjiang experienced above-average temperatures last week.

China Meteorological Administration, National Meteorological Center, Dadi Futures Research Institute.

Xinjiang weather: temperatures will drop noticeably in early October.

New crop purchasing: seed cotton purchase prices interact closely with futures prices.

Zhengzhou cotton warehouse receipts: warehouse receipts and effective forecasts are higher than the same period last year.

BCO, Zhengzhou Commodity Exchange, Dadi Futures Research Institute.

The price spread between domestic and overseas futures continues to narrow, and US cotton monthly spreads have weakened.

Dadi Futures Research Institute.

Cotton prices have fallen, improving immediate spinning profits, but inventory depreciation has occurred.

Dadi Futures Research Institute.

Operating rates at weaving mills in Gaoyang and Weifang have declined, and imported yarn inventory continues to rise.

Dadi Futures Research Institute.

The textile industry chain has accumulated inventory for three consecutive weeks, and the September peak season is not living up to expectations.

Dadi Futures Research Institute.

Xinjiang cottonseed prices are oscillating, with the overall center higher than the same period last year.

Dadi Futures Research Institute.

Viscose staple fiber is relatively firm, polyester staple fiber surged and then fell back, and the cotton/chemical fiber price spread has narrowed.

Dadi Futures Research Institute.

03. United States: US Cotton Export Signings Increase, Rainfall Unfavorable for New Crop Harvest

USDA expectations for the US cotton balance sheet.

US cotton exports: US cotton export signings increased slightly.

USDA, Dadi Futures Research Institute.

The US cotton-to-corn price ratio is at a moderately low level.

Wind, Dadi Futures Research Institute.

United States: planted area increased, yield per unit area was lowered, and production is expected to fall 5%.

USDA, Dadi Futures Research Institute.

US weather: Texas had almost no precipitation during the critical period in August, while precipitation increased during the September harvest period.

US weather: drought in major cotton-producing areas is more severe than last year.

USDA, Dadi Futures Research Institute.

The new US cotton crop has a 70% boll-opening rate and a 17% harvest rate.

USDA, Dadi Futures Research Institute.

The condition of the new US cotton crop is relatively poor, with Texas at 18%.

USDA, Dadi Futures Research Institute.

A total of 135,000 tonnes of the new US cotton crop has been inspected, with inspection progress at 4.7%.

USDA, Dadi Futures Research Institute.

The non-commercial net long ratio decreased month-on-month.

USDA, Dadi Futures Research Institute.

US weather: temperatures in US cotton areas are expected to fall in early October, while increased precipitation will be unfavorable for harvesting.

USDA, Dadi Futures Research Institute.

Chen Xiaoyan, Practicing Qualification No.: F03113174, Investment Consulting Qualification No.: Z0018709, Contact: chenxy@ddqh.com.

Sina's major cooperation platform for futures account opening is safe, fast, and secure.