Cotton enters H2 2026 at approximately 82 cents/pound, down 12% year-over-year, as global stocks rebuild on bumper crops in India and Brazil. The USDA projects 2026/27 ending stocks at 105 million bales, up 8% from 2025/26.
India's 2026/27 crop is forecast at a record 35 million bales, up 12% year-over-year, with favorable monsoon patterns supporting acreage expansion in Gujarat and Maharashtra. Brazil's crop is projected at 16-17 million bales, with Mato Grosso plantings expanding into second-crop safrinha systems.
Global mill use is forecast at 122 million bales, up 3% year-over-year, recovering from 2025's demand destruction. However, the growth rate is modest as synthetic fiber competition intensifies and fast-fashion inventory corrections persist.
China's cotton reserves remain the wildcard. The government holds approximately 6-7 million bales in state reserves and has been rotating stock through auctions. Any change in reserve policy could shift the global balance significantly.
USDA price projections for H2 2026 cluster at 75-90¢/lb.
Cotton buyers should secure H2 requirements at 78-85¢/lb through fixed contracts. The ample global supply creates a price ceiling. For textile mills, consider basis contracts during harvest periods. Budget 80-95¢/lb for 2027.