- USDA lifts global output forecast to 117.3 million bales
- Consumption projected to exceed production again
The global cotton market is set to remain well supplied during the 2026-27 marketing season, with higher production offsetting another year of demand exceeding output. According to the latest Cotton: World Markets and Trade report from the United States Department of Agriculture (USDA) Foreign Agricultural Service (FAS), global cotton production has been revised upward by 1.2 million bales from the previous estimate to 117.3 million bales, driven by improved crop prospects in Brazil, the United States, Turkiye, and Uzbekistan. Although global consumption is forecast at 122.0 million bales, higher inventories and stable trade flows are expected to prevent any significant tightening in supply.
Production outlook improves
Brazil continues to consolidate its position as the world’s leading cotton exporter, with production projected at 18.0 million bales, while US output has been revised to 13.7 million bales. India’s production estimate remains unchanged at 24.0 million bales, maintaining its status as one of the largest global producers. On the demand side, China is expected to remain the largest cotton consumer with mill use of 41.5 million bales, followed by India at 26.0 million bales, underlining the resilience of Asia’s textile manufacturing sector despite mixed global economic conditions.
Global cotton trade is forecast to remain broadly unchanged at 43.3 million bales, indicating that major importing countries are expected to maintain steady procurement. Meanwhile, global ending stocks have been revised higher to 71.2 million bales, supported by larger inventories in India, the United States, Turkiye, and Uzbekistan, reinforcing expectations of comfortable supply availability throughout the season.
Price recovery faces supply headwinds
Cotton futures have strengthened following the latest USDA update, with ICE prices recovering by around 9 cents/lb since the June WASDE report and December 2026 futures trading above 81 cents/lb. At the same time, the Cotlook A Index has recovered to nearly 90 cents/lb, reflecting improved international sentiment. However, the recovery remains largely sentiment-driven, as expanding production and comfortable inventories continue to cap upside potential.
Market participants indicate that mills are likely to continue hand-to-mouth purchasing strategies rather than building large inventories, given expectations of adequate export availability from Brazil, the United States, and other major origins. Exporters, meanwhile, are expected to compete aggressively for market share as global supplies expand.
Indonesia reflects structural demand weakness
Indonesia remains one of the weakest demand centres in Asia, with cotton consumption forecast to remain unchanged at 1.9 million bales. Weak yarn exports, rising competition from man-made fibres, illegal imports of used clothing, and low utilisation rates at spinning mills continue to constrain cotton demand despite a recent recovery in Chinese imports of Indonesian yarn. These structural challenges highlight the uneven pace of recovery across the global textile sector.
Outlook
The global cotton market is expected to remain balanced during the 2026-27 season, with higher production from major exporting countries and comfortable ending stocks likely to offset the projected production deficit. Stable global trade flows and adequate export availability are expected to keep cotton prices largely stable. However, weather conditions in key producing regions, export demand from major importing countries, and the pace of mill procurement will remain key factors to watch. Any adverse weather-related production losses or stronger-than-expected demand could tighten the current supply-demand balance and provide support to prices.
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