Bullish factors gradually materializing, April cotton prices may see a slowdown in the rally

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Cotton Market Analyst Chen Caijuan from Zhuochuang Information

【Introduction】After the 2026 Spring Festival, cotton prices have entered a new round of rise, driven by expectations of tightening global supply, steady recovery in domestic demand, and the linked increase in substitute prices. Looking ahead, the current expectation of supply tightening worldwide has not been eliminated, and the trend of domestic demand recovery continues, providing fundamental support for prices. However, the anticipation of reduced planting and production of cotton in the new year has already been priced in, and it is expected that the growth of cotton prices will slow down in April.

Cotton Prices Rise as Expected After the Spring Festival

After the Spring Festival, domestic spot cotton prices rose as expected, with the price center continuing to lift. This was driven by multiple factors, including expectations of supply tightening, demand recovery after the holiday, and rising polyester staple fiber prices as substitutes. According to monitoring data from Zhuochuang Information, on March 13, the average price of Chinese 3128B grade cotton lint increased to 16,350 yuan/ton, up 1,129.5 yuan/ton from before the Spring Festival, a 7.42% increase; and up 2,079.5 yuan/ton from the same period last year, a 14.57% increase.

Global Supply Contraction Is the Core Driver of Cotton Price Rise

The collective contraction of global supply is the main driver of the price increase. Expectations of reduced planting area in Xinjiang, China, due to water resource constraints and coordinated development of grain and cotton, have become clearer for 2026. The policy-driven reduction in Xinjiang’s cotton planting area is expected to lead to a decrease in China’s cotton output in the new year. Additionally, at the 102nd USDA Agricultural Outlook Forum held in February 2026, the forecast for global cotton production in 2026/27 was 25.26 million tons (about 1.18 billion bales), a 3.2% decrease year-on-year. Consumption was forecasted at 26.15 million tons, up 1.2%; exports at 9.58 million tons, up 0.7%. The global cotton supply and demand gap is expected to widen, and the tightening supply-demand outlook is the main reason for the post-holiday cotton price increase.

Post-Holiday Textile Industry Recovery and the “Golden March and Silver April” Peak Season

After the Spring Festival, textile companies gradually resumed operations, with rapid increases in operating rates. Raw material inventories were low before the holiday, and post-holiday replenishment demand was strong. Sales of lint cotton were smooth, high-quality cotton resources were tight, and spinners and traders were willing to hold prices, pushing up cotton prices. According to Zhuochuang monitoring data, as of the week ending March 12, the operating load of cotton spinning enterprises in Shandong increased to 59.14%, up 1.86 percentage points from February 12.

Rising Polyester Staple Fiber Prices Support Cotton Prices

Rising crude oil prices have increased costs, leading to higher polyester staple fiber prices. As a natural fiber, cotton’s price advantage has improved, providing some demand support and indirectly boosting cotton prices.

Looking ahead to April, the core factors influencing cotton price trends include changes in supply and demand, crude oil movements, and macro policies. Key aspects include the performance of the “Golden March and Silver April” peak season, the gap between expectations and reality for the new year’s planting area, and the trajectory of oil prices and US-China trade relations.

From the demand side, April is a traditional peak season, with high operating rates in cotton spinning enterprises, favorable for cotton consumption. However, attention should be paid to downstream order changes and the attitude of spinners toward replenishment.

From the supply side, the processing of 2025/26 cotton is basically completed, and April is a period for inventory digestion. Additionally, the expected decrease in cotton planting area for the new year supports bullish prices. According to Zhuochuang monitoring, by the end of February, national cotton commercial inventories decreased to 564,820 tons, down 36,440 tons from the previous month, a 5.32% decline, and a 12.95% decrease year-on-year. The downward trend is expected to continue through March and April.

From a cost perspective, the Middle East is a key urea exporter. Escalating tensions could reduce urea supply and push prices higher. Cotton’s high nitrogen fertilizer demand means rising urea prices will increase planting costs. Additionally, the closure of the Strait of Hormuz has driven up oil and natural gas prices, raising costs for cotton processing, transportation, and irrigation, which is bullish for cotton prices.

Overall, the expectation of tightening global supply remains, and the “Golden March and Silver April” peak season for textiles, along with downstream replenishment and order recovery, are expected to continue supporting prices. It is likely that cotton prices will continue to fluctuate upward in April. However, after a sustained rise, the drivers of supply and demand will gradually be fulfilled, and the price increase space will narrow. The maximum may reach 16,800 yuan/ton, up 450 yuan/ton from March 13, a 2.75% increase. Increased variables in April, such as planting area, downstream orders, Middle East tensions, and resulting oil and dollar movements, should be closely monitored.