Relative to last month, the latest USDA forecasts for 2025/26 suggest slightly lower global production (-800,000 bales, from 117.8 to 117.0 million) and slightly lower global consumption (-300,000 bales, from 118.1 to 117.8 million). The figure for world beginning stocks was reduced -1.2 million bales (to 77.3 million), and the net result for global ending stocks was a -1.6 million bale reduction (to 76.8 million bales).
The largest country-level changes for 2025/26 production projections were for India (-1.0 million bales to 23.5 million), the U.S. (-500,000 bales to 14.0 million), Pakistan (-300,000 bales to 5.2 million), and China (+1.0 million to 30.0 million). There was also a sizeable reduction to the Indian production figure for 2024/25 (-1.0 million bales to 24.0 million).
For mill-use, the largest changes were for India (-500,000 bales to 25.5 million), Turkey (-200,000 bales to 7.3 million), Bangladesh (-100,000 bales to 8.4 million), and Egypt (+400,000 to 1.2 million).
The global trade estimate for 2025/26 was unchanged month-over-month at 44.8 million bales. For imports, the largest changes were for China (-500,000 million bales to 6.5 million), Turkey (-200,000 bales to 4.8 million), Bangladesh (-100,000 bales to 8.4 million), Pakistan (+300,000 bales to 5.3 million), and Egypt (+400,000 1.1 million). For exports, the largest changes were for Australia (+100,000 bales to 5.0 million) and Brazil (+300,000 to 14.3 million). There was a sizeable change to the 2024/25 export figure for the U.S. (+400,000 bales to 11.5 million).
PRICE OUTLOOK
Among the developments in U.S. trade policy over the past month were two court rulings that questioned the legal authority for many of the tariff announcements made this year. Both rulings were immediately appealed by the administration. While the appeal process has been underway, tariff rates were left unchanged at the levels in place when these rulings were made in late May. These rates are scheduled to remain in effect at least until July 31st, when another set of court arguments will begin.
In the meantime, bilateral negotiations continue. The deadline for agreements for most countries is approaching (July 9th), but the only deal that has been announced so far is with the U.K. It is possible that other deals could include provisions involving purchases of U.S. exports (similar to the Phase One deal), potentially including cotton, but since no other agreements have been announced, no details are available. If deals are not reached by the deadline, the “reciprocal” tariffs that were announced on April 2nd are threatened to go into effect.
While any eventual enduring set of U.S. trade policies remains unknown, they can be expected to have implications for global macroeconomic conditions as well as demand throughout supply chains. In updated figures released this week, the World Bank suggested global economic growth would be half a point lower than they were projecting at the start of the year (currently 2.3% for 2025) and forecast sluggish conditions could continue for at least the next couple years. Within supply chains, decision makers are having to gauge the evolving outlook for consumer spending while attempting to position orders against the volatile situation around tariff costs.
The latest available U.S. import data is for April, which was the first month that widespread tariff increases went into effect. Despite higher tariffs, there was not a significant pullback in the volume of apparel imports. In April, the weight volume of U.S. apparel imports, reflective of the amount of fiber being imported, was actually higher month-over-month in seasonally-adjusted terms (+5.6% for all fibers, +8.1% for estimated cotton content). This suggests retailers may have been pulling some orders forward. In future releases, data will reveal if there could be a corresponding pullback, but it will take several months for policy volatility to settle and then another couple months for data availability to catch up with policy developments.
While the demand outlook will remain clouded as long as trade policy is unsettled, the situation on the production side of the balance sheet is evolving. The largest year-over-year decrease in production had been forecast for China, where a retreat from last year’s record yields was expected to result in a 3.0 million bale decline. Early on, weather conditions have proven favorable again this year (for the 2025/26 crop) and the size of the decrease was already reduced by a million bales (2024/25 production was 32.0 million, current forecast for 2025/26 is 30.0 million). Along with ample domestic stocks, a larger Chinese harvest in 2025/26 could dampen Chinese import demand.
For global exportable supply, a key variable is the U.S. weather. West Texas has been getting moisture, but excessively wet conditions in states east of Texas have delayed and prevented some planting. A smaller U.S. crop implies lower global exportable production, but the build in U.S. stocks in 2024/25 and the series of record Brazilian harvests could limit any concerns of scarcity.
Source: Cotton Incorporated