Huatai Futures: The mid- to long-term cotton price center still has the potential to move upward

On the international front, the latest USDA Outlook Forum report shows that the global cotton production for 2026/27 is projected at 25.26 million tons, down 3.2% year-on-year; global consumption is expected to reach 26.15 million tons, up 1.2% year-on-year; and the global ending stocks for the new season are estimated at 15.50 million tons, down 5.2% year-on-year. The USDA outlook is somewhat optimistic, suggesting that the global cotton supply and demand balance may tighten in the upcoming season. Coupled with the record-high weekly signing volume of U.S. cotton and the strong recovery of offshore markets during the Spring Festival holiday, reaching the $0.65 per pound mark. Continued attention should be paid to supply-side developments in the new season.

Domestically, this week, the domestic textile market is expected to gradually resume operations, and market transactions are likely to recover gradually. In the medium to long term, downstream spinning capacity expansion will increase cotton consumption. This year, domestic production is expected to remain high with strong consumption expectations. Supply and demand are projected to be relatively balanced, but due to low carry-over inventories, there may still be tightening inventories at the end of the year. Additionally, the cotton planting area in Xinjiang for 2026/27 is expected to undergo structural contraction, and the medium- to long-term cotton price center is likely to move upward. Future focus should be on the reduction in planting area for the new season and the release of target price subsidy policies. (Huatai Futures)