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Cotton Incorporated

Monthly Economic Letter

Cotton Market Fundamentals & Price Outlook

February 2026

Cotton Price Definitions
How to Read a Balance Sheet

RECENT PRICE MOVEMENT

Most cotton benchmarks were flat to slightly lower over the past month.

  • Prices for the nearby March NY/ICE futures contract started moving lower in the second half of January, but declines accelerated in February. Losses pulled values from the upper end of the recent range (near 65 cents/lb) to life-of-contract-lows near 61 cents/lb.
  • Prices for the December NY/ICE contract followed the same general pattern, but the change in prices was smaller, with losses only from 69 to 67 cents/lb.
  • The A Index eased slightly, from 74 to 73 cents/lb.
  • The CC (China Cotton) Index 3128B held near 104 cents/lb or 16,000 RMB/ton over the past month. The RMB was stable near 6.95 RMB/USD.
  • Indian prices moved marginally lower, from 78 to 76 cents/lb or from 55,200 to 54,000 INR/candy. The INR traded near 91 INR/USD over the past month.
  • Pakistani prices rose slightly, from 67 to 70 cents/lb or from 15,500 to 16,000 PRK/maund before easing more recently. The PKR traded near 280 PKR/USD over the past month.

 

SUPPLY, DEMAND, & TRADE

The latest USDA report featured a slight increase in global 2025/26 production (+425,000 bales to 119.9 million) and a small decrease in global 2025/26 mill-use (-200,000 bales to 118.7 million).  There were only minor revisions to figures from prior crop years, and the net effect of this month’s changes on the forecast for 2025/26 ending stocks was a +628,000 increase (to 75.1 million).  This figure is in line with the average for world ending stocks since COVID (74.3 million bales from 2022/23 to 2024/25).

At the country-level, the only change in production of 100,000 bales or more was for China (+500,000 bales to 35.0 million).  For mill-use, the only change of 100,000 bales or more was for Pakistan (-100,000 bales to 10.8 million).

The global trade projection did not move much (-50,000 bales to 43.7 million), but there were several meaningful updates to country-level figures. Import estimates rose for China (+200,000 bales to 5.6 million) and India (+200,000 bales to 3.2 million) but fell for Pakistan (-200,000 bales to 5.7 million) and Turkey (-100,000 bales to 4.5 million).  The only change for exports of 100,000 bales or more was for the U.S. (-200,000 bales to 12.0 million).

 

PRICE OUTLOOK

U.S. trade negotiations are on-going and there have been a series of announcements indicating lower tariffs from a range of locations.  In late January, there was the signing of agreements with certain Central American partners (El Salvador and Guatemala) that eliminated “reciprocal” tariffs on apparel and textiles.  Many former CAFTA-DR free trade countries had been facing 10 percentage point reciprocal tariff increases.

In early February, a framework for an agreement between the U.S. and India was released alongside an Executive Order.  These documents indicate that India will eliminate or lower tariffs on industrial and agricultural imports from the U.S.  The documents also state that the U.S. will lower its reciprocal tariffs on several categories of imports from India, including textiles and apparel, to 18 percent (reciprocal tariff levels for many major apparel exporters to the U.S. are around 20 percent).  This level is significantly lower than the 50 percent reciprocal rates that India had been recently facing (a 25 percent reciprocal rate set in late July plus another 25 percent in early August).

Most recently, there was an agreement announced between the U.S. and Bangladesh.  The text includes a statement that certain textile and apparel goods from Bangladesh would have no reciprocal tariff (most-favored tariff rates that were in effect before reciprocal tariffs were introduced should remain).  In exchange, Bangladesh agreed to purchases of $3.5 billion in U.S. agricultural products, including cotton.

These announcements reinforce a trend towards tariff reduction over the past several months.  Nonetheless, tariff rates remain significantly higher than they were a year ago.  After consistent year-over-year increases before April 2025, U.S. import volumes have turned lower.  In the last two months of available data (October and November), apparel imports were down 20% and 15% year-over-year (in terms of weight volume).

Total U.S. end-use represents about 15% of world mill-use (weight volume of U.S. textile and apparel imports is around 18 million bales out of world mill-use near 119 million bales), so lower U.S. apparel imports imply some consequence for global fiber demand, but that effect is tempered by the importance of other markets (the other 85%).  The extent that trade disputes affect global macroeconomic conditions, and how those developments can shape consumer purchases globally, may have greater implications for fiber demand.

In the meantime, attention is moving ahead to the 2026/27 crop year.  A preliminary estimate from a survey of U.S. cotton professionals suggests planted acreage could be stable year-over-year.  Year-over-year comparisons are complicated by the record amount of prevented planting in the U.S. last crop year (prevented plantings are acres intended to be planted but were not due to the weather).  Last crop year, the USDA indicated there were about 700,000 acres of prevented cotton plantings.  When prevented plantings are considered relative to the 9.3 million acres that were actually sown last year, this suggests 2026/27 acreage could be in the neighborhood of 9.7 million acres (allowing for the 10-year average for prevented plantings near 300,000 acres).  The National Cotton Council will release results from its survey of growers’ planting intentions February 12th.

Outside the U.S., Brazilian production growth is forecast to slow and Australian production is projected lower.  Domestic policy developments are expected influence planting in China and India.  Expectations of less supply in 2026/27 may be contributing to the premium in new crop futures (December NY/ICE futures, currently near 68 cents/lb) relative to old crop futures (March and May NY/ICE, currently near 61 cents/lb).

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Cotton Incorporated