In April 2026, the cotton market's supply-demand balance is tilting rapidly. The International Cotton Advisory Committee (ICAC) latest data shows global cotton production for 2025/26 decreasing month-on-month while consumption increases, a divergence that directly fuels market expectations of a supply deficit. Meanwhile, abnormal weather in key producing countries has become a catalyst for bullish sentiment, driving domestic and international cotton prices higher in tandem.
Cost-side movements never stop at the raw material stage. Along with rising cotton prices, polyester staple fiber prices also climbed, quickly raising textile mill production costs. Industry public data indicates that textile processing spot profits have been continuously declining, meaning the profit space in the spinning stage is being squeezed by both upstream raw material price increases and downstream price pressure.
The Logic Behind Supply Tightening
This cotton price rally is not driven by short-term sentiment. ICAC's production and consumption data point to a more structural contradiction: global cotton acreage growth is sluggish, while textile and apparel consumption is modestly recovering after destocking in 2024. Reduced production combined with increased consumption lowers expected ending inventories, shifting the supply-demand balance from loose to tight.
Weather factors amplified this trend. In April, persistent drought in Texas, abnormal rainfall in central India's cotton region, and delayed new-crop planting in Brazil—these signals quickly transmitted to Chinese main ports through international cotton merchants. As the world's largest cotton importer and consumer, China's port inventories and quota release pace became market focal points.
Profit Redistribution in the Supply Chain
The direct victim of rising cotton prices is the spinning mill. Taking 32-count pure cotton yarn as an example, the increase in yarn quotes in April significantly lagged behind cotton price gains, pushing spinning spot profits from thin margins to actual losses. This phenomenon is particularly pronounced in cotton spinning clusters like Shandong and Henan provinces, where some small and medium-sized mills have proactively reduced operating rates to control raw material inventory risk.
Profit pressure does not stop at spinning. Fabric companies face a dilemma: accepting upstream price increases erodes their own gross margins, while refusing price hikes risks losing orders. Feedback from Keqiang Light Textile City and Shengze Oriental Silk Market shows that in late April, inquiries for conventional cotton fabrics fell about 12% month-on-month, with end buyers showing clear resistance to price increases.
The rise in polyester staple fiber further reduces substitution space. When the price gap between cotton and chemical fibers narrows, the effectiveness of downstream companies' blended substitution strategies weakens, forcing cost pressure to spread across a broader range of fiber varieties.
New Variables for Foreign Trade Quotations
For foreign trade companies, rising cotton prices are rewriting quotation models. Traditionally, quotation cycles for export orders range from 30 to 60 days, but current weekly cotton price fluctuations have already exceeded many companies' profit safety margins. In April, some exporters began including raw material price adjustment clauses in contracts, though this is often difficult to accept in a buyer's market.
Another variable worth watching is the exchange rate. The RMB remained narrowly volatile against the USD in April, but if cotton prices stay high combined with exchange rate fluctuations, exporters' comprehensive cost control will face greater challenges. Southeast Asian competitors are equally pressured by rising cotton prices, but countries like Vietnam and Bangladesh still hold a cost advantage due to their zero-tariff cotton import policies.