Cotton Rallies on El Nio Concerns and Low Stocks, Xinjiang Weather in Focus

Amid expectations of a moderate to strong El Niño event forming by summer 2026, cotton markets in China and abroad strengthened on April 21. The market is increasingly pricing in climate risks, though the actual impact of El Niño's is yet to be watched.   

Recently, topics such as the "strongest El Niño in 140 years" and the resulting global heatwaves have drawn widespread public attention. In response, China's National Climate Center has stated that El Niño conditions are expected to begin in May, with a moderate to strong El Niño event likely to form during the summer and autumn. 

Under such current low cotton inventory and weather expectation, on April 21, the cotton markets in both China and abroad strengthened in tandem. The ICE cotton July futures contract was driven higher again by macro front, successfully standing above US 80 cents per pound. The most-traded ZCE cotton CF2609 closed the session at Yuan 15,985/tonne, hitting an intraday high of Yuan 16,035/tonne.  

In southern Xinjiang, cotton planting is nearing its final stages, while in northern Xinjiang, overall progress ranges from 50% to 70%, with planting expected to be completed by mid-May. Recently, parts of Xinjiang have experienced strong winds, dust storms, and rainfall, leading to some plastic film tearing and lifting.

Amid ongoing concerns over reduced cotton acreage in Xinjiang, weather changes during the critical growing period have quietly set off a market tug-of-war focused on climate, planting, and area. To understand the potential impacts of El Niño, it is first necessary to briefly introduce the main growth stages of Xinjiang cotton and the baseline climatic conditions for each stage.

The cotton growth cycle consists of several stages: sowing (March-April), seedling (April-June), budding (June-July), flowering (July-August) and boll formation and fiber fill (August-October). The seedling stage is a period of vegetative growth, where temperature fluctuations are a key factor affecting emergence rates. Rainfall during the budding stage determines budding success. The flowering and boll formation stage is the most critical for yield formation and also requires the most water. The challenges posed by El Niño to Xinjiang cotton will vary across these different growth stages.

First, the core impact is from high temperatures and drought during the flowering and boll formation stage. As mentioned, this stage requires the most water. El Niño typically brings high temperatures across Xinjiang and below-average rainfall in southern Xinjiang, which can directly reduce pollen viability, increase the shedding rate of buds and bolls, and intensify pressure on water and fertilizer management.

In 2026, particularly in the lower reaches of the Tarim River, groundwater over-extraction has led to stricter controls on irrigation water, which will significantly increase irrigation costs. Although northern Xinjiang may receive more rainfall, the potential impact of severe convective weather on cotton production must also be monitored.

Second, the secondary risks of extreme weather during the boll opening stage are also worth attention. If El Niño persists, northern Xinjiang may face prolonged cloudy or rainy conditions that could increase the rate of boll rot, while southern Xinjiang may experience autumn drought, which could hinder fiber development and lower micronaire values. On the other hand, El Niño could also delay the arrival of frost, providing additional growing time for certain late-maturing varieties.

In terms of current impact, the effects of El Niño have not yet begun, but the market already pricing the associated risks. For the cotton industry, while a relatively mature system for field management is already in place, caution is still warranted. The market will continue to closely monitor weather conditions throughout the upcoming cotton growing stages.