The global cotton market is facing its most significant supply-demand imbalance in six years, with the U.S. Department of Agriculture's May 2026 report projecting a 5.7 million bale production gap for the 2026/27 marketing year. World production is forecast at 116.0 million bales — down 5% or 6.6 million bales from 2025/26 — while consumption is expected to reach 121.7 million bales, a six-year high.
Stocks Drawn to Six-Year Low
Global ending stocks are projected at 71.8 million bales, a 7% decline from 77.3 million bales in 2025/26 and the tightest level since 2021/22. The global stocks-to-use ratio is forecast to drop to 59.0%, the lowest since 2020/21's 58.4% reading.
"Global stocks have been elevated in recent years but they would be pulled to their tightest level in six years if USDA forecasts are correct," noted Cotton Incorporated in its May 2026 Monthly Economic Letter.
Major Production Declines Across the Board
Nearly every major cotton-producing nation is expected to see lower output in 2026/27. The steepest declines are concentrated among the world's top growers:
| Country | 2026/27 (M bales) | Change vs 2025/26 |
|---|---|---|
| China | 33.5 | -2.3M |
| Brazil | 17.5 | -2.0M |
| Australia | 3.0 | -1.5M |
| Turkey | 2.5 | -0.6M |
| United States | 13.3 | -0.6M |
India is the sole major exception, where output is expected to be flat to slightly higher. The U.S. season-average farm price for 2026/27 is forecast at 73 cents per pound, up from the prior year.
Consumption Driven by Asian Mills
On the demand side, mill use is rising across all top-consuming countries. China leads with a 500,000-bale increase to 41.0 million bales, followed by India (+500,000 to 26.0 million), Bangladesh (+200,000 to 8.0 million), Pakistan (+100,000 to 10.4 million), Vietnam (+100,000 to 7.8 million), and Egypt (+100,000 to 1.3 million).
The USDA characterizes the 121.7 million bale consumption figure as aligning with the 25-year average growth rate for cotton demand, following a slowdown in 2025/26. Resilient consumer demand, an expected drawdown in stocks, and higher oil prices boosting cotton's competitiveness against polyester are cited as supporting factors.
ICAC Takes a Slightly Different View
The International Cotton Advisory Committee (ICAC) projects a more balanced picture in its May 2026 "Cotton This Month" report. Using a tonne-based framework, ICAC forecasts 2026/27 production at 25.9 million tonnes against consumption of 25.2 million tonnes, with ending stocks rising 4% to 17.9 million tonnes. The ICAC Cotlook A Index forecast for 2025/26 ranges from 73 to 84 cents per pound, with a midpoint of 78 cents.
Despite methodological differences, both agencies agree that the market is transitioning from surplus to tighter conditions — a constructive backdrop for cotton prices heading into the 2026/27 season.
Sources: USDA World Agricultural Supply and Demand Estimates (May 2026), USDA Cotton: World Markets and Trade, Cotton Incorporated Monthly Economic Letter (May 2026), ICAC Cotton This Month (May 2026), USDA AMS Weekly Cotton Market Review.