2026 Global Cotton Yarn Market Analysis: ICE Cotton Prices Fluctuate, EU FLR Countdown Begins, Compliant Cotton Yarn Becomes A Purchasing Threshold

At the end of June 2026, the main contract of ICE cotton futures closed at 76.45 cents per pound, down 3.9% from May. The main contract of Zhengzhou cotton also fluctuated synchronously, and the internal and external cotton price difference expanded from 3,052 yuan/ton to 3,473 yuan/ton. The progress of US cotton exports in the 2025/26 fiscal year reached 83%, while that of Brazilian cotton reached 92%. The spot market in the international market was tight, and "supply not meeting demand" remained the basic situation. For cotton yarn factories, the high price difference in the raw material end directly transmitted to the yarn price. The index price difference between domestic C32S and imported was approximately 500 yuan/ton. Purchasers switched between domestic combed and imported Brazilian and Vietnamese yarns at a significantly accelerated pace.
The EU's "Regulation on Prohibition of Forced Labor Products" was passed in December 2024 and will be officially enforced in the fourth quarter of 2027. The European Commission must establish a forced labor risk database by June 14, 2026, and cotton, cotton yarn, and ready-made garments are listed as priority high-risk products. This means that 2026 is the final window period. If cotton yarn suppliers cannot provide full-chain work hours and origin traceability, goods arriving at EU ports may be intercepted, removed from shelves, or recalled starting from 2027. In addition, the new traceable physical good cotton regulations introduced by BCI in February 2025 were added to the mix. In January 2026, CoC v1.1 was upgraded, and brand manufacturers were included in the certification scope for the first time, requiring the disclosure of supply chain carbon footprints. EU direction orders are now basically only accepted if both BCI and digital passport traceability are fully covered.
In terms of categories, combed cotton yarn in the high-count shirts and haute couture fields has a stable demand, and the premium ranges from 40S to 80S are controlled by long-staple cotton and the drop-out rate of combed cotton. OE air-spun yarn is popular in the fields of denim, workwear, and home textiles, with a significant price advantage but a relatively weak narrative for sustainable development. Recycled cotton yarn is the fastest-growing category in the EU direction, with GRS and OEKO-TEX double certificates being the entry ticket, and the premium can reach 5% to 10%.
In terms of supply chain structure, in 2025, China's cotton and cotton yarn exports covered 25 countries including Vietnam, Bangladesh, and Pakistan, with Vietnam being the largest export market. The downstream machine operation rates in India, Pakistan, and Vietnam increased month-on-month, and the enthusiasm for purchasing Xinjiang cotton yarn did not wane. However, European and American brands still prefer US cotton, Brazilian cotton, and BCI plus third-party human rights audits combinations to avoid UFLPA and FLR risks. The advice for purchasers is: If doing EU brand orders, the preferred choice is a factory that provides full coverage of BCI CoC v1.1 plus digital passport traceability; if doing Southeast Asian ready-made garment assembly and re-export, the current cost-performance of Xinjiang long-staple combed cotton is still in the first echelon.
Looking forward to the second half of 2026 to 2027, the differentiation in the cotton yarn industry will not be in the count but in the certificates. Factories that can simultaneously provide BCI, GRS, OEKO-TEX, and full-chain work hour records will have a significantly wider bargaining power in the EU market. If ICE breaks through the resistance level of 81 cents, the yarn prices will rise only a matter of time, and locking prices and compliance need to be carried out simultaneously.