USDA Projects Lower Global Cotton Stocks In 2025/26 As Mill Use Rises

Global cotton stocks are expected to tighten in the 2025/26 season, driven by rising mill use, moderate trade recovery, and lower production across several key producing countries.
 
According to the latest U.S. Department of Agriculture (USDA) projections for the 2025/26 marketing year (August–July), global cotton ending stocks are forecast to decline to 76.8 million bales, slightly lower than 2024/25 but still the third-highest since 2015/16. The modest decline reflects a narrowing gap between global production and mill consumption, signaling renewed demand strength amid lingering production challenges.

Global Trends: Production, Consumption and Trade

• World cotton production is projected at 117.0 million bales, down 2.5% (2.9 million bales) from the previous year. The drop is attributed to area reductions and yield declines in major producing countries such as China, India, U.S., and Australia.
• In contrast, mill use is expected to increase by 1% to 117.8 million bales, reaching its highest level in five years. The rise is supported by lower global cotton prices, restocking needs and anticipated economic growth in 2025 and 2026, despite competition from synthetic fibres.
• Global trade is set to rebound by 5% to 44.8 million bales, supported by higher mill demand. This would mark the highest trade volume since 2020/21.
• The top exporters remain Brazil (32%) and the United States (28%), together accounting for 60% of global cotton exports.

U.S. Cotton: Lower Area, Modest Yield, Stable Demand
The USDA has reduced its forecast for 2025/26 U.S. cotton production by 500,000 bales to 14.0 million bales, citing lower planted area and adverse weather. This is nearly 3% below 2024/25 levels, but still above the recent 3-year average.

Key factors affecting U.S. production:

• Cotton area fell due to unfavourable price signals and competition from other crops. USDA’s March report estimated a 12% drop in planted area to 9.9 million acres.
• Weather-related delays, especially in Mississippi, have hindered planting progress and may result in higher-than-usual “prevented planting” claims.
• The national yield is forecast at 820 pounds per harvested acre, the lowest in four years, largely due to the Southwest region’s growing share of the harvest.

Despite a smaller crop, U.S. cotton demand remains steady at 14.2 million bales, driven primarily by export growth. Exports are projected to rise by 9% to 12.5 million bales, supported by increased global demand. However, domestic mill use remains stagnant at 1.7 million bales, one of the lowest on record.

U.S. ending stocks are forecast at 4.3 million bales, slightly lower than 2024/25, and the stocks-to-use ratio is projected to decline to 30% (down from 33%).

The average U.S. upland cotton farm price is forecast at 62 cents per pound, nearly unchanged from the 2024/25 season.

Country Highlights: China, India, Brazil and Australia

• China remains the world’s largest producer at a forecast 30.0 million bales, but that is 6% below 2024/25 due to a sharp yield decline, even as area increases modestly. China’s mill use is expected to drop 1.4% to 36.5 million bales, its lowest in four years, as textile production shifts to other sourcing regions.
• India’s production is projected to decrease 2% to 23.5 million bales, driven by lower planted area, although yields may improve slightly.
• Brazil is forecast to increase production to 18.25 million bales, supported by higher planted area, while yields remain steady. This reaffirms Brazil’s strong position in the global cotton export market.
• Australia, however, is expected to see a sharp decline in production, down by 27% to 4.1 million bales due to area reductions, water availability concerns and a shift toward alternative crops.

Looking Ahead: Mill Use Rising Amid Tightening Supplies
The projected 1% rise in global mill use to 117.8 million bales in 2025/26 continues a three-year upward trend, with all major consuming countries, except China and Pakistan, expected to show gains. India, Bangladesh and Vietnam are among those contributing to global consumption growth.

Pakistan’s mill use is forecast to remain flat at 10.6 million bales, although this is still its highest level since 2021/22, supported by improved domestic supplies.

Global cotton prices are expected to stay near 80 cents per pound, maintaining parity with 2024/25 and reflecting the balance between supply limitations and moderate demand growth.

The USDA’s 2025/26 cotton outlook points to a tightening global balance sheet, with lower stocks, rising mill use and resilient trade volumes, despite production setbacks in several key regions. For stakeholders across the textile value chain from growers to mills and traders, the evolving dynamics present both opportunities and challenges amid continued shifts in sourcing strategies, fibre competition and global economic uncertainties.