Cotton Prices Volatile as China Reserve Sales and Xinjiang Heat Shape Market Outlook
By jayesh chouhan 2026-07-29 13:03:05
Price Fluctuations in Cotton Market Driven by Reserve Sales and Weather Conditions
Beijing: The cotton market witnessed volatility last week amidst concerns regarding rising supply and production outlooks. Sales from government cotton reserves improved domestic availability, while persistently high temperatures in Xinjiang exerted pressure on the potential yield of the new cotton crop.
According to SunSirs, the domestic spot price for 3128B grade lint cotton stood at 17,658 RMB/tonne as of July 27, marking a 0.70% increase compared to the previous week.
Strong Response to Reserve Sales
Sales from the government cotton reserve began on July 20. During the first week (July 20–24), a total of 40,100 tonnes of cotton were offered for sale, and the entire volume was sold, resulting in a 100% sales rate.
The average transaction price was 17,405 RMB/tonne, equivalent to approximately 18,004 RMB/tonne on a 3128 grade basis. The high premiums achieved in the auction signaled strong buying interest from textile companies.
The average transaction price for Xinjiang cotton was 16,994 RMB/tonne, while the average price for imported cotton was recorded at 17,516 RMB/tonne.
**Hot Weather Pressures New Crop**
Temperatures in key cotton-producing regions of Xinjiang remained significantly above normal over the past two weeks, while rainfall was below average. Extreme heat led to issues such as the shedding of flowers and cotton bolls in some areas, raising concerns about the new crop's yield.
According to the Ministry of Agriculture and Rural Affairs' analysis in July, the cotton production forecast for the 2026/27 season has been revised down to 6.34 million tonnes. Meanwhile, the estimated yield per *mu* has been lowered to 147 kilograms. Weak Demand in the Textile Sector
The downstream textile industry is currently going through the traditional off-season. Mill purchasing activity remains sluggish due to weak orders and limited demand.
Last week, the operating rate of textile mills in key regions stood at 72.0%. Yarn inventory levels have risen to an average of 20–30 days. Many small and medium-sized mills are restricting purchases to immediate requirements due to cash flow constraints.
Market Outlook
Sales from government cotton reserves have temporarily eased supply pressure and limited the likelihood of a sharp rise in prices. However, a potential recovery in demand during the upcoming peak season and high premiums realized in reserve auctions could provide price support.
Going forward, the trajectory of cotton prices will depend on weather conditions, the actual yield of the new crop, and demand from the textile industry.
