RECENT PRICE MOVEMENT
Most cotton benchmarks increased over the past month.
- Prices for the December NY/ICE futures contract increased from 81 to 84 cents/lb over the past month.
- The A Index climbed from 90 cents/lb to 95 cents/lb.
- Gains for the CC (China Cotton) Index 3128B were from 118 to 121 cents/lb or from 17,700 to 17,900 RMB/ton. The RMB strengthened from 6.80 to 6.75 RMB/USD.
- Indian prices rose from 86 to 91 cents/lb or from 64,400 to 68,100 INR/candy. The INR consistently traded around 95 INR/USD.
- Pakistani cotton prices increased from 78 to 80 cents/lb or from 17,800 to 18,300 PKR/maund. The PKR held near 278 PKR/USD.
SUPPLY, DEMAND, & TRADE
The latest USDA report included relatively little change to global production numbers (+373,000 bales to 117.6 million for 2026/27), but it boosted estimates for world mill-use in both 2025/26 and 2026/27 (+935,000 bales to 120.9 million for 2025/26 and +965,000 bales to 122.9 million for 2026/27).
The net effect of this month’s updates was a -1.5 million bale reduction to the forecast for 2026/27 world ending stocks (to 69.7 million bales). If realized, this would be the lowest level of global warehoused supply at the end of a crop year since 2011/12, when ending stocks were 66.7 million bales. The global stocks-to-use ratio is projected to be 56.7% in 2026/27, which would be the lowest since 2010/11.
The role of China’s reserve system can complicate interpretations of global stock numbers. For the world-less-China, 2026/27 ending stocks are forecast to be 34.7 million bales. If realized, this would be near the volume from 2024/25 (34.8 million bales) but would be the lowest level since 2022/23 (33.4 million). The 2026/27 world-less-China stocks-to-use ratio is projected to be 39.8%, which would be near the levels from 2020/21 and 2021/22 (40.6% and 41.0%) but would be the lowest level since 2016/17 (38.4%).
At the country-level, Brazil (+250,000 bales to 18.3 million) and the U.S. (-92,000 bales to 13.6 million) had the largest changes to 2026/27 production estimates.
For mill-use, there were a series of updates for 2025/26 and 2026/27. All figures in parentheses below are current estimates for those crop years in million bales.
China +500,000 bales for 2025/26 (41.5) and +500,000 bales 2026/27 (42.0)
India +500,000 for 2025/26 (26.0) and +500,000 for 2026/27 (26.5)
Indonesia +150,000 for 2025/26 (2.1) and +100,000 for 2026/27 (2.0)
Vietnam +150,000 for 2025/26 (8.2) and +200,000 for 2026/27 (8.2)
Bangladesh -200,000 for 2025/26 (7.4) and -200,000 for 2026/27 (7.6)
Egypt -100,000 for 2025/26 (1.3) and -100,000 for 2026/27 (1.3)
The global trade projection for 2026/27 increased slightly (+456,000 bales to 43.8 million).
For imports, the largest changes were for
Bang. -200,000 bales for 25/26 (7.2) and -200,000 bales for 26/27 (7.4)
China +200,000 for 2025/26 (7.2)
Egypt -100,000 for 2025/26 (1.0) and -100,000 for 2026/27 (1.1)
India +200,000 for 2025/26 (4.8) and +500,000 for 2026/27 (3.0)
Vietnam +155,000 for 2025/26 (8.2) and +200,000 for 2026/27 (8.2)
Indonesia +150,000 for 2025/26 (2.1) and +100,000 for 2026/27 (2.0)
Turkey +100,000 for 2025/26 (4.6)
For exports, the largest changes were for
Brazil +197,000 bales for 2025/26 (15.5) and +300,000 for 26/27 (15.3)
Azerbaijan +120,000 for 2025/26 (0.6)
Greece +100,000 for 2025/26 (1.1)
India +100,000 for 2025/26 (1.1)
Turkey +100,000 for 2025/26 (1.1)
PRICE OUTLOOK
Several possible factors could have supported price increases over the past month. One of them may be heightened expectations for tightening supply in the new crop year. This would have been emphasized in the latest set of USDA estimates, which indicate multi-year lows in both global and world-less-China stocks.
Another could be renewed hostilities around the Persian Gulf. The previous rally in NY/ICE futures that brought values near 85 cents/lb began in early March, soon after the start of the conflict (February 28). Around the time of the ceasefire and the memorandum of understanding that paused fighting, the market eased back to levels as low as 75 cents/lb. Following renewed attacks, prices have again started to approach 85 cents/lb.
Crop conditions could be another factor supporting prices. In the U.S., USDA crop condition ratings have been slipping. In China, it has been hot and dry in Xinjiang province and the weather has been cited as a reason for some of the recent strength in Chinese prices. Simultaneously, additional supply is being made available to the market through another round of selling from the Chinese reserve system. This selling started on July 20, and in the few weeks since sales began, all of the lots on offer were sold. The broader market may take this as a signal of solid Chinese mill demand, but commentary from the trade community suggests that mills more globally have been hesitant to purchase at current prices.
For prices to continue to climb, demand may need to follow the market higher. That demand could come from the world’s mills if downstream buyers are willing to maintain or build orders despite higher costs. Demand could also come from Chinese officials if they decide to replenish the supplies being sold from reserves.
A headwind for demand could come from higher energy prices, which have given rise to another bout of global inflation. How consumers adjust spending on finished textile goods as budget pressures increase is another question for the demand side of the market.