The global cotton market is experiencing notable volatility and structural change as 2025 draws to a close, with developments abroad shaping the outlook for U.S. growers, shippers, and merchants. Internationally, a combination of high global stockpiles and subdued demand from major textile-consuming economies has kept cotton prices under sustained pressure and near multi-year lows. This bearish tone is attributed in part to slower economic activity in China, a top market for cotton lint and finished textiles, where ongoing sluggishness has translated into reduced mill consumption and a pronounced cutback in import volumes. However, China is still forecast to import around 5.8 million bales in 2025/26, up slightly from the previous year but well below its historic high usage, as mills steadily increase synthetic fiber use rather than relying solely on cotton. Global apparel trade remains roughly -8% lower than last year, underscoring continued softness in consumer demand.
Chinese mills have substituted much of their U.S. intake with cotton from Brazil, West Africa, and Central Asia, where lower freight rates, favorable exchange rates, and government support have improved competitiveness. Persistent Section 301 tariffs and U.S. forced-labor restrictions on Xinjiang-origin cotton continue to distort global sourcing patterns and erode traditional U.S.–China trade ties.
On the supply side, Brazil continues its ascent, poised to eclipse the United States as the world’s leading exporter of raw cotton. Brazilian production for 2025/26 is projected at about 14.5 million bales, a +10% year-over-year increase, with exports near 14.3 million bales, enough to overtake U.S. shipments for the first time. Average yields in Brazil approach 1,649 lbs per lint acre, nearly double the U.S. average of 892 lbs, underscoring the country’s efficiency advantage. A softer Brazilian real has further enhanced export competitiveness, allowing its cotton to land cheaper than U.S. fiber in key Asian destinations such as Vietnam, Bangladesh, and Pakistan. I should note that Brazil and the U.S. together now account for roughly 60% of global cotton exports for 2025/26.
For American producers, this new competition comes during a challenging year at home. U.S. cotton production for the 2025/26 season is projected near 12.9 million bales, a figure slightly higher than initially feared but still among the smallest crops in a decade. U.S. exports are expected to rise to about 12.5–13.3 million bales, a modest improvement over 2024/25 but still well below the 2021 peak above 15 million. Domestic ending stocks near 3.3 million bales highlight a tighter U.S. balance sheet, but global ending stocks are projected at 77.3 million bales, which is slightly higher year-over-year. Benchmark futures for December 2025 delivery are trading between 66 and 71 cents per pound in Q4, and spot prices in Texas have been trending between 63 and 66 cents per pound. These values still leave many producers operating below break-even levels estimated at 70–75 cents.
Beneath these headline trends, the critical market nuance for the 2025/26 season is that global mill use of 118.1 million bales is nearly balanced with production of 118.4 million bales, rather than a deficit; world cotton stocks are set to rise slightly. While the margin is very thin, the stocks-to-use ratio declines only marginally. However, this does mean the market is susceptible to upside volatility if there are weather-driven supply shocks.
Trade realignments continue to reshape global flows. With U.S. shipments to China down, exporters have aggressively pursued new business in Bangladesh and Vietnam, projected to import 8.4 and 8.0 million bales, respectively, as well as Turkey and India.
Down in Texas, spot prices currently hover near the lower end of recent ranges, around 63 to 66 cents per pound. While the prospect of lower global carryout in 2026 is only marginally supportive, it has not sparked optimism among price-sensitive producers and investors. The upcoming 2025 Farm Bill debate may influence future acreage decisions, particularly if revisions are made to ARC/PLC reference prices or crop insurance incentives. At the same time, a growing portion of U.S. cotton is being marketed through sustainability programs such as the U.S. Cotton Trust Protocol, which can command premiums of 1–2 cents per pound in select export markets.
For those in the U.S. ag sector and allied industries, the present market environment is as complex as ever. On one hand, the persistent needs of global textile giants ensure underlying demand for American fiber, especially with assurances of quality, traceability, and reliable shipments. On the other hand, the competitive threat from Brazil, changing trade alliances, and the imperative to innovate —whether through sustainability, technology, or supply chain redesign —mean U.S. stakeholders must adapt quickly. Risk management, precision in production contracts, and attentiveness to shifting demand centers are no longer recommendations but requirements to sustain profitability and relevance in the years ahead. Bottom line, US cotton producers are certainly facing their fair share of headwinds and hurdles. Buy more US cotton!!! (Source: ers.usda, fibre2fashion.com, straightsresearch)
