By Yuri Calil and John Robinson
Cotton prices remain low and moving sideways. Nearby futures and U.S. spot stayed weak into early 2026 (about $0.63/lb). New-crop Dec’26 futures still carry about a $0.06/lb premium over nearby futures, signaling the market expects some tightening later in the year. The carry in the futures market is not a reason to plant more cotton. It reflects the market pricing in an expected supply contraction, not a demand-led recovery.
The global balance sheet explains why prices are stuck. For 2025/26, USDA projects 119.9 million bales of production and 118.7 million bales of mill use, raising ending stocks to 75.1 million bales. The U.S. picture is equally heavy: ending stocks reach 4.4 million bales, pushing the domestic stocks-to-use ratio to 32%, matching the highest level since the 2019/20 pandemic-era peak of 43%, with the season-average upland price lowered to $0.60/lb (USDA, 2026). High stocks slow any recovery unless demand surprises higher, which has not happened. This shifts attention to where supply cuts may emerge.
Exporter production signals are mixed, but the direction is clear (Figure 1). The United States projects 13.9 million bales in 2025/26, down 3.5%, with flat harvested area (7.80 million acres) and a yield-driven decline. Australia shows a sharper pullback: production drops 19.6% to 4.5 million bales, driven by a 21.7% area cut as the Murray–Darling Basin enters a second dry season. Brazil is the swing case where the USDA projects 18.75 million bales (+10.3%), while CONAB is lower at 17.47 million bales with area down 3.1% and a lower yield. Those differences matter because Brazil can set the marginal export tone.
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