Supply and demand challenges have persistently weighed on the U.S. cotton market over the past year. Global and domestic supplies have been ample from a balance sheet perspective, making supply shocks hard to come by.
Before October, weak fundamentals had kept New York futures in a narrow range for nearly a year and a half. The absence of strong commercial activity has left producers to sell when prices reach the upper end of the range and speculators to take profits when prices reach the lower end of the range. Additional pressure in the fall led to prices breaking below that range and pushing to fresh multi-year lows.
Poor economics led to producers planting 17 percent fewer acres compared to the previous season. U.S. farmers harvested a decent-sized crop as higher yields partially offset lower planted acreage. Still, it was enough to raise the stocks-to-use ratio, which measures the relationship between supply and demand, to the third-highest in the past 10 years, falling below the 2015/16 and 2019/20 seasons. That has been thanks to demand.
Drastically reduced exports to China have been the primary driver of reduced demand for U.S. cotton. Exports finished the marketing year with 12.4 million bales shipped between August 2024 and July 2025, according to data from the U.S. Census Bureau. Total shipments were up 4.7 percent from the previous season, as demand from other countries helped offset lower purchases from China.
For the current 2025/26 marketing year, U.S. cotton export sales commitments are off to a slow start. Total commitments as of Nov. 20 are running 16 percent behind the previous season and are the slowest pace in the past decade. Vietnam is the only country that has shown year-over-year growth for U.S. cotton imports.
Lower demand has been driving supplies to burdensome levels. Domestically, consumption is the lowest since the 19th century. U.S. cotton demand depends on exports, largely due to overseas manufacturing in the apparel industry and a substantial increase in synthetic fiber usage. Cotton exports are forecast to represent nearly 88 percent of total cotton demand for the current 2025/26 marketing year. That compares to just 79 percent during the 2015/16 season.
U.S. export commitments at a 10-year low signal further struggles for the market. Limited purchases from China will force exporters to compete for buyers in developing countries. Future trade dynamics will hinge heavily on China’s production and import needs, alongside demand from other major buyers.
The market has been signaling a need for reduced supplies, particularly in the U.S., for the balance sheet to encourage higher prices. But demand also needs a boost, considering that production has been trending lower for the better part of the last 10 years. Since exports account for the majority of demand, the U.S. will have to focus on bilateral trade agreements with countries, particularly in Southeast Asia.
Want to receive more commodity-related information? Sign up for a free trial to stay up-to-date on the latest market trends.
--
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.