Global cotton production is expected to continue its slow decline in 2026/27. The International Cotton Advisory Committee (ICAC) is projecting global output to fall more than -4.5% to just 24.8 million metric tons (MMT). However, global demand is expected to exceed production next season, setting the stage for a global supply shortage if the trend continues. The supply crunch could be exacerbated by the war in Iran, which has disrupted the flow of raw materials used to make synthetic fibers like polyester and acrylic.
Years of lower cotton prices amid declining demand, particularly from China, have contributed to farmers around the world giving up on the crop. The US was expected to buck the declining cotton acreage trend in 26/27, with the USDA in March projecting a +4% increase. However, most insiders think that is overly optimistic now, considering the ongoing drought in key production areas and new upward pressure on input costs since the outbreak of the Iran war.
Those same pressures, along with transportation disruptions caused by the war, may also weigh on planned cotton acres in other key production countries this year and beyond. In other words, global cotton production forecasts for 26/27 are more likely to creep lower than higher.
Demand, on the other hand, is currently projected to hold steady at around 25 MMT. The ICAC notes that, thanks to sufficient stocks from previous seasons, this supply-demand mismatch is likely to bring the market back into balance in the 26/27 marketing year. However, if it continues, global cotton supplies could be strained in the near future.
ICAC and other cotton insiders have been predicting that cotton will continue to gradually lose market share to manmade fibers like polyester, acrylic, and nylon. The conflict with Iran may change that trajectory, though, if synthetic fibers become harder and more expensive to acquire.
Gulf petrochemical companies are the main suppliers of raw materials for making synthetic fabrics in key regions like South Asia. Most synthetic fibers are made from petrochemical feedstocks derived from fossil fuels like crude oil and natural gas. Nearly two-thirds of clothing manufactured worldwide contains nylon, polyester, and/or acrylic fibers.
The war has cut off supply chains of these critical raw materials. Some have inventories that will tide them over for a while but they obviously won’t last forever. Fast-fashion brands in particular stand to be pinched due to their quick production runs and heavy use of synthetic materials.
The garment industry is already warning that clothing prices by the end of this summer could be as much as +15% higher due to rising energy prices and supply chain disruptions. Some manufacturers are already looking at ways to incorporate more natural fibers like cotton in order to minimize supply and price shocks.
Cotton is a hungry crop and the places it is grown tend to be far from the manufacturing hubs where it is utilized in textiles. That means skyrocketing fertilizer prices, transportation costs, and logistics concerns will all play heavy roles in how the cotton market evolves this season. Fallout from the war means it’s highly likely to look a lot different than insiders were initially expecting. (Sources: ICAC, RFDTV, South China Morning Post, Just Food)
