I. Recent Market Trends and Dynamics

**Price Trends:** Volatile upward movement; futures and spot markets strengthen in tandem.

From early to mid-March 2026, domestic cotton prices continued their upward trajectory. The China Cotton Price Index (CC Index 3128B)—representative of standard-grade cotton—reached an average of 16,752 yuan/ton during the week of March 9–15, marking a month-on-month increase of 141 yuan/ton. This figure represents a significant rise compared to early February (when prices hovered between approximately 15,967 and 15,988 yuan/ton). During the same period, the price of the benchmark cotton futures contract on the Zhengzhou Commodity Exchange staged a strong breakout, hitting a new high on March 13—its highest level since April 2024.

**Market Characteristics:** Active spot trading; accelerated shipments from Northern Xinjiang.

Currently, the spot market is dominated by "fixed-price" transactions, and trading activity has seen a significant uptick. As of March 5, the national cotton sales rate had reached 71.9%, representing a significant year-on-year increase and signaling robust demand for inventory replenishment following the Spring Festival holidays. Regionally, cotton from Northern Xinjiang is being shipped out at a noticeably faster pace than that from Southern Xinjiang; thanks to its lower impurity levels, stable quality, and efficient logistics, it has become the primary choice for textile enterprises looking to restock their inventories.

II. Key Factors Influencing Market Trends

**Supply Side:** Xinjiang significantly reduces planting area; supply expected to tighten.

The Xinjiang Uygur Autonomous Region plans to stabilize its total cotton output at approximately 5.6 million tons in 2026—a reduction of about 9.2% compared to 2025. Consequently, the targeted planting area is projected to undergo a substantial reduction of 5 to 7 million mu. This represents the most aggressive adjustment to planting acreage seen in recent years, thereby providing a solid floor of support for forward cotton prices.

**Demand Side:** The "Golden March, Silver April" peak season coincides with improving export performance.

The textile industry is gradually entering its traditional peak season. Customs data indicates that in January and February 2026, my country's exports of textiles and garments reached a total value of US$50.45 billion—a year-on-year increase of 17.6%—injecting a strong dose of confidence into the market. Downstream textile enterprises resumed production rapidly following the Spring Festival; operating rates have since rebounded to normal levels, driving robust demand for inventory replenishment. **Policy and International Trade**

**Issuance of Additional Import Quotas:** On March 16, the National Development and Reform Commission (NDRC) issued an additional 300,000 tons of import quotas for processing trade under the preferential tariff rate (outside the tariff quota) for cotton in 2026. This move aims to ensure that textile enterprises have access to the cotton they require; it is expected to boost the supply of imported cotton and alleviate market expectations regarding a tight domestic supply.

**Elevated Domestic-International Price Spread:** The current price spread between domestic and international cotton stands at approximately 3,844 RMB per ton. This disparity is stimulating imports of both raw cotton and cotton yarn, leading to a noticeable increase in port inventories.

**Support from the International Environment:** Factors such as drought in major U.S. cotton-producing regions and geopolitical conflicts in the Middle East—which have driven up fertilizer costs—are providing support to international cotton prices. Concurrently, market expectations that the U.S. Federal Reserve may cut interest rates in 2026 suggest that a weakening U.S. dollar could prove bullish for dollar-denominated commodities.

**III. Future Market Outlook and Key Focus Points**

Synthesizing the views of various institutions, the cotton market in 2026 is expected to be characterized by a tug-of-war between "expectations of supply contraction" and the "strength of demand recovery."

**Short Term (Next 1–2 Months): Focus on Peak Season Orders and Sowing Area**

The market will focus on verifying the actual quality and volume of orders during the traditional peak season—typically referred to as "Golden March and Silver April." If downstream orders demonstrate strong sustainability, restocking driven by essential demand could propel cotton prices higher; conversely, if demand falls short of expectations, prices face the risk of a volatile retreat. Simultaneously, the actual cotton sowing area in Xinjiang during April will emerge as a critical variable; any divergence between the actual figures and market expectations will directly influence the trajectory of futures prices.

**Medium to Long Term: Supply-Demand Rebalancing and Range-Bound Fluctuation**

A significant reduction in the cotton planting area in Xinjiang constitutes the core variable shaping the supply-demand landscape for the entire year. If policy measures are implemented effectively, they will drive a transition in the global cotton market from a state of oversupply toward a state of rebalancing. Cotton prices are expected to maintain a pattern of range-bound fluctuation—finding a floor supported by production costs and policy measures, while facing a ceiling imposed by inventory levels and demand constraints. In the short term, Zhengzhou cotton futures may oscillate within the 15,000–15,700 RMB/ton range until a new, powerful market catalyst emerges.