Q4 2025 Cotton Market: Supply, Demand, and 2026 Price Outlook

1. Global Cotton Supply Analysis: Major Producing Countries

United States Cotton Outlook 2025/26

The U.S. remains the top cotton exporter, but production for the 2025/26 season is expected to decline. USDA projects output at 13.2 million bales, 8 percent below last year. With planted area at 9.3 million acres and yields averaging 861 pounds per acre, U.S. production is at its second-lowest level since 2015/16. This creates space for Brazil and other suppliers to expand their global export share.

India Cotton Production and Policy Impact

India remains one of the world’s largest cotton economies. Output is projected at 24 million bales for 2025/26. While higher efficiency has supported yields, reduced planting has limited overall growth. Government support prices continue to protect farmers, while temporary import duty exemptions aim to ease pressure on the textile sector.

China Cotton Production and Consumption Trends

China is the global leader in cotton use and a major producer. FAS Beijing projects output at 6.91 million tons (31.7 million bales), up 8 percent from earlier forecasts. Imports are expected to fall sharply to 5 million bales as textile mills increase synthetic fiber use. This reduces China’s role as a driver of global cotton imports.

Brazil Cotton Export Growth

Brazil is closing the gap with the U.S. as a global exporter. USDA data shows 2025/26 output at 18.1 million bales, with exports reaching 13.9 million. Expanded acreage, improved yields, and cost-effective farming make Brazil a key supplier to Asian markets like China and Vietnam.

Turkey and Other Key Producers

Turkey’s cotton production is estimated at 700,000 tons (3.2 million bales) for 2025/26, with reduced acreage and drought weighing on output. Domestic consumption is steady at 1.45 million tons, while imports are set to decline. Elsewhere, Australia is expanding to 4.5 million bales and Mali shows a slight drop, contributing to more diversified global supply.

2. Global Cotton Demand and Trade Patterns

China and India Cotton Demand Outlook

China is forecast to consume 38.5 million bales in 2025/26, but weak domestic demand and higher synthetic fiber use will limit imports to 5.2 million bales. India, meanwhile, is planning record government procurement of 14 million bales and expects imports above 2 million bales thanks to temporary tariff suspensions.

Cotton Export Leaders: U.S., Brazil, and Australia

Exports from the U.S. are forecast at 13 million bales, Brazil at 13.9 million, and Australia at 5.1 million. Together, these three countries control more than half of global cotton exports.

Cotton Import Growth in Asia and Beyond

Vietnam’s imports are projected to rise to 8.1 million bales, securing its spot as the second largest importer globally. Bangladesh, Mexico, and Turkey are also raising imports, highlighting Asia and the Middle East as the main growth hubs for cotton demand.

3. Cotton Prices and Market Trends 2025–2026

Global Cotton Price Levels

Since mid-2025, cotton prices have held within a narrow range. NY/ICE December contracts traded between 66 and 71 cents per pound, the A Index remained around 78 cents, and regional benchmarks showed mixed movements: China near 98 cents, India’s Shankar-6 at 80 cents, and Pakistan around 69 cents.

Cotton Price Drivers

Global output for 2025/26 is forecast at 117.7 million bales, while use is projected at 118.8 million bales. Stocks are set to fall to 73.1 million bales. Lower U.S. output, higher Brazilian and Australian production, weak Chinese imports, synthetic fiber substitution, and policy decisions such as India’s tariff moves all shape price dynamics.

Cotton Price Forecast for 2026

Analysts expect cotton prices to decline to around 60 cents per pound by the end of 2025 and to 57 cents by mid-2026. Futures remain range-bound, with no clear upside unless demand rises sharply or production is disrupted. Risk management through hedging is expected to remain central for both textile firms and investors.

4. Global Cotton Outlook 2026: Risks and Opportunities

Climate Risks and Sustainability Challenges

Climate change remains a key risk factor, with droughts in the U.S. Southwest and erratic rainfall in Brazil’s Mato Grosso impacting output. At the same time, better irrigation and seed technology in Australia and Pakistan are helping boost resilience. Sustainability, particularly in Europe, is driving demand for cotton with a reduced carbon footprint.

Policy and Trade Outlook

India’s import duty suspension has created short-term opportunities, while U.S.–China trade tensions continue to inject uncertainty. Turkey and Pakistan are advancing sustainable production policies to remain competitive in export markets.

Cotton Farming Technology and Efficiency

Advances in digital agriculture, including satellite monitoring, AI-driven yield forecasting, and smart irrigation systems, are lowering costs and improving quality. Brazil and Australia are leaders in scaling these tools across large farm areas.

Consumer Trends: Sustainable Fashion and Recycled Cotton

Demand for sustainable textiles and recycled cotton is rising, especially in Europe. While natural fiber demand remains strong, recycled content is gaining market share. The fashion industry continues to push for transparency and lower-carbon cotton supply chains.

5. Conclusion: Key Takeaways for the Cotton Market in Q4 2025

The final quarter of 2025 is defined by strong harvests, uncertain demand, and shifting trade policies. U.S. production is falling, but Brazil and Australia are adding balance. China and India remain central to global demand, though imports are volatile. Prices are holding steady within a narrow range, but risks tied to climate, policy, and sustainability remain strong as 2026 approaches. The global cotton trade is adapting with flexible supply chains and advanced farming technologies, while producers and investors increasingly rely on data-driven strategies.

References

1. USDA Economic Research Service. Cotton and Wool Outlook: September 2025
2. USDA FAS Brasilia. Cotton and Products Annual (Brazil) – April 2025
3. USDA FAS Brasilia. Cotton and Products Update (Brazil) – September 2025
4. USDA FAS Ankara. Turkey: Cotton and Products Update – September 2025
5. USDA FAS Beijing. China: Cotton and Products Update – September 2025
6. Reuters. India eyes record cotton buying as imports, US tariffs dampen prices – September 2025
7. FashionUnited. India suspends raw cotton import duties until September 2025
8. Cotton Incorporated. Monthly Economic Letter – September 2025