The global cotton industry is undergoing a test of "ice and fire". The expectation of increased production in major producing countries is high, the profit margin of the textile industry has dropped to rock bottom, and geopolitical risks have added fuel to the fire. Under this multi-dimensional game, how will cotton prices be affected? The battle for survival among the upstream and downstream of the industrial chain has quietly begun.
Global production increases are pressing down, and cotton prices are facing a "ceiling".
Cotton in Xinjiang, China, is growing vigorously, and news of increased production has also come from production areas such as Brazil and Australia. Data from the China Cotton Association shows that the planting area in Xinjiang has increased by 3.3% year-on-year. Coupled with favorable meteorological conditions, the market availability of new cotton is a certainty. Globally, the USDA predicts that supply will slightly exceed demand, and the basis and purchase price of cotton in the New Year are expected to be lower than last year. A short-term basis of 700 yuan per ton is acceptable, but the long-term pressure is huge - the sharp increase in supply is like a sharp sword hanging over the cotton price.
Strong basis vs. weak demand, the market is in a dilemma
The domestic cotton market has fallen into a "split". The shortage of high-grade cotton has pushed up the basis, and the tariff policy has forced enterprises to turn to domestic cotton, with inventories continuously being digested. However, the basis has approached the premium limit of futures warehouse receipts, and the further upward space is limited. The off-season for the textile industry (June to September) becomes a crucial juncture - if demand remains weak, the basis may "not hold up". The premium on warehouse receipts in the spot market is high, while the new basis is expected to decline. In the future, it is necessary to closely monitor production, policies and the movements of traders. The market is swinging between "strong expectations" and "weak reality", waiting for the signal of a breakthrough on the demand side.
Profit margins have been halved and the reshuffling is accelerating
The cotton textile industry has fallen into its "darkest hour". From January to April 2025, the profit margin of large-scale enterprises was only 1.82%, hitting a record low. The loss-making ratio expanded to 28.1%, and the contradiction between overcapacity and shrinking demand erupted comprehensively. The expansion of production capacity in Xinjiang has reshaped the regional pattern, making it difficult for inland enterprises to survive. Data shows that the industry's revenue share has halved from its peak to 20%, and the total profit has dropped to 21.7 billion yuan, both being the lowest in over a decade. However, technological innovation and green development may be the key to breaking the deadlock, and the industry is seeking a high-quality development breakthrough.
Low-level fluctuations have become the norm, waiting for those who can break the deadlock
Domestic cotton prices have fallen into a deadlock of weak supply and demand, with both upward and downward space restricted. Although the framework of the China-Us trade agreement has been reached, the details of tariffs remain unclear. Low inventory and the "post-pricing" demand of textile enterprises provide short-term support, but the off-season atmosphere in the downstream is strong. The losses of cotton mills have intensified or even led to production halts, and the pace of raw material procurement has slowed down. The good growth of cotton in the New Year further intensifies the pressure. Overall, cotton prices are likely to remain at a low level with fluctuations, waiting for external variables such as a recovery in demand, favorable policies, or an escalation of geopolitical conflicts.
From the pressure of increased production to the industry's cold spell and then to geopolitical risks, the cotton market is playing a game under the "triple predicament". Cotton farmers, textile enterprises and investors are all seeking a balance point - whoever can break the deadlock first might be able to seize the opportunity amid fluctuations.
Follow us for more info. wedding & event linen suppliers wholesale Readortex, official website and B2B online store