RECENT PRICE MOVEMENT: Most cotton benchmarks were flat to slightly higher over the past month.
- Prices for the nearby May NY/ICE futures contract were relatively stable over the past month, trading between 64 and 66 cents/lb.
- Since early February, prices for the December NY/ICE contract followed a slow and erratic trend higher, climbing from levels below 68 to over 70 cents/lb most recently. This pattern can be seen as building off of gains since marking the recent low of 67 cents/lb in mid-December.
- The A Index moved slightly higher, from 73 to 75 cents/lb.
- The CC (China Cotton) Index 3128B rose from 104 to 109 cents/lb or from 16,000 to 16,600 RMB/ton between early February and the present. The RMB fluctuated, but current levels are nearly even with those one month ago (around 6.92 RMB/USD).
- Indian prices moved marginally lower, from 76 to 74 cents/lb or from 54,700 to 54,100 INR/candy. The INR weakened slightly, from 90 to 92 INR/USD over the past month.
- Pakistani prices generally traded near 68 cents/lb or near 16,000 PRK/maund. The PKR held close to 280 PKR/USD.
SUPPLY, DEMAND, & TRADE: The latest USDA report featured an increase for 2025/26 global production (+1.1 million bales to 121.0 million) and small reduction to world mill-use (-140,000 bales to 118.6 million). There were no changes to historical figures, so the net effect of these updates was a +1.3 million bales addition to the forecast for world ending stocks (to 76.4 million).
The largest additions to country-level harvest estimates were for Brazil (+750,000 bales to 19.5 million), China (+500,000 bales to 35.5 million), and Argentina (-115,000 bales to 1.3 million).
For mill-use, the largest changes were for China (+500,000 bales to 39.5 million), Bangladesh (-100,000 bales to 8.0 million), Mexico (-100,000 bales to 1.2 million), Vietnam (-100,000 bales to 8.0 million), and Pakistan (-200,000 to 10.6 million).
The global trade forecast increased +200,000 bales to 43.9 million. In terms of imports, the biggest revisions were for India (+800,000 bales to 4.0 million), Pakistan (-200,000 bales to 5.5 million), Bangladesh (-100,000 bales to 7.9 million), and Vietnam (-100,000 bales to 8.0 million).
PRICE OUTLOOK: In the second half of February, the USDA holds its Annual Outlook Forum. At the conference, the USDA releases a preliminary and partial set of supply, demand, and trade forecasts for an upcoming crop year. The figures released a few weeks ago suggested lower global production (116.0 million bales in 2026/27 versus 121.0 million in 2025/26) and higher global mill-use next crop year (120.1 million bales in 2026/27 versus 118.6 million in 2025/26).
If realized, a result would be production deficit around four million bales. When that deficit is subtracted from the current forecast for 2025/26 global ending stocks (76.4 million bales), the result would a level around 72.5 million bales. Using rounded numbers, this is a little below the values between 73 and 76 million bales experienced over the past four crop years (2022/23-2025/26) and a little above the levels in 2018/19 and from 2020/21-2021/22.
While tightening in global supply can be supportive of prices, another factor that has more closely coincided with stronger price movement in recent history has been the strength of Chinese import demand. Around each recent surge in Chinese imports, there were reactions in prices that lifted NY/ICE futures over 90 cents/lb. Examples include June 2018 (Chinese imports were 9.6 million bales in 2018/19), the post-COVID climb that culminated in the spring of 2020 (Chinese imports were 12.8 million bales in 2020/21), and the brief run over 100 cents/lb in February 2024 (Chinese imports were 15.0 million bales in 2023/24).
The volatility in Chinese import demand is unmatched by other markets around the world, with no other country able to lift and lower purchases on a scale approaching ten million bales year-over-year (Chinese imports rose from 6.2 million in 2022/23 to 15.0 million in 2023/24 and then dropped to 5.2 million in 2024/25). Correspondingly, there is no other market that can exert as much influence on available exportable supply, implying considerable influence on global price direction.
For these reasons, expectations regarding Chinese imports are important for the price outlook. A feature of the Chinese market in recent years has been the growth in production, enabled by a series of record setting yields. China’s yield in 2025/26 is up more than +20% over the past five years and up +66% over the past ten years. This has narrowed China’s production deficit from the levels around ten million bales ten year ago to those closer to five million bales. In addition, China built up its reserve stocks with its last surge in imports (in 2023/24) and has yet to release those accumulated supplies, meaning that those volumes remain a potential buffer against Chinese import needs in the short-term.
In its preliminary forecasts, the USDA projected Chinese imports in 2026/27 would be 7.0 million bales. This would be the highest level since 2023/24, but it would also be below the recent surges in Chinese import demand that accompanied recent surges in cotton prices.
Nonetheless, the market has been reacting to some upward pressure with the transition to the new crop year. Notably, values for NY/ICE December futures (delivery after the 2026/27 northern hemisphere harvest) have been trading at a premium relative to old crop prices (i.e., May NY/ICE futures). Chinese cash (CC Index) and futures prices have also been moving higher Zhengzhou Commodity Exchange or ZCE futures are up 12% since early December), perhaps in a response to a government announcement of a coming “structural” change in cotton planting in Xinjiang.