Instead of falling, it rises! Cotton prices climb strongly during the textile off-season, supported by multiple favorable factors, with Zhengzhou cotton continuing to rise in June.

Entering early June, the domestic cotton market witnessed a phase of upward trend, with both futures and spot prices rising simultaneously. From June 2 to 3, the main Zhengzhou cotton contract stabilized above the 16,300 yuan/ton mark, with the intraday maximum increase exceeding 125 yuan/ton; the spot market for 3128B national standard seed cotton was quoted at 17,748 yuan/ton. Spot and futures prices strengthened simultaneously, defying the seasonal lull and showing an upswing. This round of price increase was jointly driven by three factors: expected production reductions in major cotton-producing regions, low market inventory, and the implementation of cotton subsidy policies.

Policy support has become the most crucial stabilizing anchor for cotton prices. Previously, relevant national departments officially introduced the new target price policy for Xinjiang cotton for the 2026–2028 period, confirming that the target purchase price would remain unchanged at 18,600 yuan/ton and continuing the previous price-subsidy separation model, with a fixed subsidy production of 5.1 million tons.

Currently, both spot and futures prices are significantly lower than the policy floor price, effectively dispelling concerns about a deep market decline, stabilizing cotton farmers’ reluctance to sell, and supporting bullish expectations along the industry chain. Against the backdrop of policy-guaranteed planting income, ginning mills are showing increased willingness to stockpile, further tightening the circulating supply of spot cotton, thus strengthening the price floor from the cost side.

On the supply side, the persistent tightness of supply and demand remains the fundamental logic driving cotton price increases. According to on-site surveys in production areas, Xinjiang cotton fields this year have experienced stage-specific low temperatures during the seedling period, resulting in expectations of reduced yields; market forecasts for the total output of the new crop continue to rise.

Meanwhile, after last year’s ongoing destocking, both domestic commercial and industrial inventories of cotton remain lower than historical levels. Most medium and small yarn mills in inland regions have limited raw material reserves and can only maintain a just-in-time procurement approach, making market-available spot resources scarce.

Under the dual effect of low inventories and expectations of reduced new-crop production, traders are generally unwilling to sell at low prices, and spot quotations have steadily followed the futures upward.

However, from the downstream consumption perspective, the textile industry is entering the traditional off-season. The operating rate of grey fabric weaving has declined, and the growth of terminal apparel and home textile orders is limited. Small and medium yarn mills face pressure in shipments, with some low-end yarn varieties being passively discounted for promotion, which, to some extent, restrains the potential for significant cotton price hikes.

The market shows a differentiated pattern of rising raw material prices but weakening finished products: leading textile enterprises hold autumn and winter stocking orders to maintain just-in-time replenishment, while small and medium factories remain cautious, strictly controlling raw material purchases and adopting a mainstream approach of limited procurement according to demand.

For cotton-spinning enterprises, rising raw material costs have already compressed production profits, necessitating flexible strategies such as using futures hedging and multiple-material blending to hedge operational risks from cotton price volatility.