USDA 2025 Cotton Outlook Presents Mixed Bag: Declining Production, Rising Demand & Market Competition

The USDA’s 2025 Cotton Outlook presents a nuanced forecast for the 2025/26 marketing year, highlighting shifts in global production, consumption, and trade patterns. While cotton demand is expected to rise, production declines and persistent market challenges may continue to influence price trends and trade flows.

Global cotton production is projected to fall by 3% to 116.7 million bales in 2025/26. This decline is driven largely by reduced output in China, which accounts for two-thirds of the decrease. Other key producing nations, including India, Turkey and Australia, are also expected to experience lower yields. In contrast, Brazil and the United States anticipate slight production gains, reinforcing Brazil’s position as the world’s third-largest cotton producer.

On the demand side, global cotton consumption is set to grow by 3% to 119 million bales. This increase is fueled by economic recovery and strong demand from textile hubs, with China contributing half of the overall growth. Despite this upward trend, cotton consumption remains below the peak levels seen two decades ago, with competition from synthetic fibres continuing to erode its market share.

Cotton prices are expected to remain under pressure due to high stock levels, although demand growth will provide some support. The A-Index, a benchmark for global cotton prices, is projected to average 82 cents per pound, reflecting a modest 1.5-cent increase from the previous year.

U.S. cotton farmers face additional headwinds as low prices and competition from other crops are likely to reduce planted acreage by 11% to 10 million acres. With an average yield of 833 pounds per harvested acre, total U.S. production is forecast at 14.6 million bales, up 1% from the previous year. While exports are expected to increase to 13 million bales, the U.S. will remain the second-largest exporter, behind Brazil.

China’s cotton sector remains a focal point of the global market. Production is forecast to drop to 28.5 million bales due to lower yields, while consumption is projected to rise to 39 million bales, the highest in six years. Consequently, China’s cotton imports are expected to increase by 23% to 9 million bales, reflecting stronger domestic demand and lower domestic stocks.

Despite this, China’s growing preference for synthetic fibres and shifting global trade policies may continue to reshape the cotton market. The country’s government reserves are projected to be the highest since 2017/18, providing a buffer against potential supply disruptions.

World cotton trade is forecast to grow by 8% to 46 million bales, driven by rising import demand from Bangladesh, Vietnam and China. Brazil is set to maintain its position as the world’s leading cotton exporter, with an expected share of 30% of global trade, surpassing the U.S. for the second consecutive year.

The U.S., despite an 18% increase in exports to 13 million bales, continues to face strong competition from Brazil and other emerging exporters. The country’s share of global trade is projected to rebound slightly to 28%, though it remains below the five-year average.

The 2025 cotton outlook presents a mixed scenario: while demand recovery signals a positive trend, production declines and market competition pose ongoing challenges. The U.S. faces a constrained production outlook, while Brazil continues to expand its influence in global trade. China’s import demand may provide a crucial support for cotton prices, but the long-term sustainability of cotton’s market position remains uncertain amid growing competition from synthetic fibres and economic uncertainties.

As the industry navigates these complexities, market participants must remain adaptable, focusing on efficiency, sustainability and innovation to maintain competitiveness in the evolving global textile landscape.