Mon Jun 9,
In its May report, The United States Department of Agriculture (USDA) has projected global cotton consumption to reach 118.1 million bales in the 2025-26 marketing year. This would mark the highest level of use in five years, signaling a cautious yet notable rebound in global cotton demand. The forecast reflects a continuation of steady recovery following years of disruptions triggered by excess inventories and the COVID-19 pandemic. However, this growth remains subdued compared to historical trendline levels, primarily due to ongoing economic uncertainty and growing competition from synthetic fibres.
One of the key drivers of this consumption increase is the steady drawdown of excessive inventories that had accumulated at the wholesale and retail levels in developed economies during the 2021-22 season. These inventories had initially dampened demand, but their gradual liquidation has supported consumption growth over the past two years, a trend expected to persist into 2025-26. Importantly, cotton fibre consumption continues to correlate strongly with future cotton product imports, particularly in advanced economies such as the United States, European Union, Japan, and others. In 2024, product imports reached approximately 7.7 million metric tonnes—consistent with the 10-year average—indicating a stabilization of global trade after years of volatility.
In the United States—the world’s largest importer of cotton products—economic indicators such as low unemployment, stable wages and resilient consumer spending continue to support demand for cotton-based goods like apparel and home textiles. Real GDP in the U.S. grew by 2.8% in 2024, exceeding expectations, although growth is expected to moderate to 1.7% in 2025. Nonetheless, the strength of the U.S. economy remains a significant pillar for global cotton demand. Similarly, in other key markets like the EU and Japan, stable economic conditions are helping sustain retail orders.
Despite the optimism in consumption, global cotton production is projected to decline by 3.3 million bales to 117.8 million bales in 2025-26. This reduction is primarily attributed to lower yields and stagnant acreage in China, along with weaker planting incentives in Australia and the United States due to softer cotton prices. In contrast, Brazil is forecast to achieve record output, supported by expanded area and strong global demand. Consequently, Brazil is expected to remain the world’s top cotton exporter with 14.0 million bales, followed by the United States at 12.5 million bales.
Global cotton trade is also projected to increase to 44.8 million bales, up 2.3 million bales from the previous year. Bangladesh and Vietnam are anticipated to be the largest importers, with record imports of 8.5 and 8.0 million bales, respectively. China’s imports are forecast to rise modestly to 7.0 million bales—still significantly below the exceptional 15.0 million bales imported in 2023-24. Pakistan, meanwhile, is expected to reduce imports slightly due to improved domestic production.
Price trends have remained relatively stable. The U.S. season-average farm price is forecast to ease to 62 cents per pound, while futures on the Intercontinental Exchange (ICE) have hovered around 66 cents per pound. U.S. spot prices have seen a slight uptick, averaging near 64 cents per pound, supported by recent rainfall in key cotton-growing regions like Texas. Meanwhile, international price dynamics vary, with Brazilian prices rising due to currency strength and strong exports, while Chinese and Pakistani prices have softened amid domestic uncertainties.
Although the overall outlook is cautiously optimistic, several risk factors persist. These include a potential slowdown in global GDP growth—especially in the U.S. and China—as well as ongoing volatility in trade policies and tariff regimes. Moreover, the continued affordability and availability of synthetic fibres pose structural challenges for cotton, which is increasingly facing substitution in global fibre markets.
In conclusion, the cotton sector in 2025-26 stands at a crossroads: benefiting from improving fundamentals and inventory normalization, yet facing headwinds from macroeconomic conditions and fibre competition. As the market stabilizes, sustained growth will depend on how well it navigates these challenges while aligning with evolving consumer preferences and trade dynamics.