High global stocks and trade shifts keep cotton markets under pressure
Cotton prices continue to move sideways as the market enters early 2026. Nearby futures and U.S. spot prices remain weak near $0.63 cents lb. New-crop December 2026 futures hold a small premium over nearby contracts, but this reflects expected supply tightening rather than stronger demand.
The global balance sheet explains the slow price movement. USDA estimates global cotton production at nearly 120 million bales for 2025/26; slightly above expected mill uses. As a result, ending stocks rose to about 75 million bales. In the United States, ending stocks are projected at 4.4 million bales, pushing the stocks-to-use ratio to around 32%. High inventories continue to limit price recovery.
Production trends among major exporters are mixed. U.S. production is projected lower due to reduced yields, while Australia is expected to see a sharp decline because of dry conditions and reduced planted area. Brazil remains the key uncertainty, with projections varying between government agencies. Since Brazil plays a major role in exports, its final production level could strongly influence global prices.
Trade patterns are also shifting. Global cotton trade is forecast to rise slightly, but buyers are adjusting sourcing strategies. The United States is gaining sales in some markets such as Vietnam, while Australia has gained share in China. Changes in export demand can quickly affect prices and basis levels.
Acreage expectations suggest limited support for prices. The National Cotton Council projects planted the area to decline slightly in 2026. Competing crops like corn continue to offer stronger price incentives, reducing motivation for cotton expansion.
Weather remains the main uncertainty. As La Niña conditions fade toward neutral, parts of Texas continue to face dry soils and growing drought concerns. Poor spring rainfall could raise abandonment risk and tighten supply later in the year.
For growers, a cautious marketing approach remains important. Pricing small portions during rallies and monitoring export demand, Brazil’s production, and local moisture conditions may help manage risk in a challenging market environment.