December NY/ICE cotton futures climbed from 84 to 88 cents/lb over the past month, touching 93 cents/lb on Aug. 31 before retreating to near 86 cents/lb in early September, according to Cotton Incorporated's monthly economic newsletter. The A Index briefly broke 100 cents/lb around the start of September before settling back to 96 cents/lb, roughly where it stood a month earlier.

The curve is steep for the 2026/27 crop year. March, May and July contracts trade above December, with May near 91 cents/lb — the highest of the nearby board. More distant 2027/28 contracts sit lower, with December 2027 near 80 cents/lb, signaling the market is pricing tightness as a near-term phenomenon rather than a structural shift.

Asian spot markets followed the futures board higher. The CC (China Cotton) Index 3128B rose from 121 to 124 cents/lb between mid- and late August, holding near 123 cents/lb in September; in local terms, prices moved from 18,000 to 18,400 RMB/ton before easing to 18,200. The RMB strengthened from 6.75 to 6.71 against the dollar. Indian prices rose from 91 to 94 cents/lb before slipping to 92, ranging between 68,400 and 70,200 INR/candy and now sitting near 68,900, with the rupee steady around 95 INR/USD. Pakistani prices gained from 80 to 85 cents/lb, or 18,300 to 19,300 PKR/maund, with the PKR near 277 to the dollar.

The balance sheet tightens

USDA's latest report cut the 2026/27 global production forecast by 317,000 bales to 117.3 million and left mill use essentially unchanged at 122.9 million (-1,000 bales). Revisions to prior crop years lifted beginning stocks by 502,000 bales to 75.3 million. The net effect: 2026/27 ending stocks rise 172,000 bales to 69.9 million — still, if realized, the lowest level since 2011/12.

Country-level production revisions were mixed. Brazil gained 250,000 bales to 18.5 million and Kazakhstan rose 125,000 to 0.5 million, while Turkey fell 300,000 to 2.4 million, the U.S. dropped 407,000 to 13.2 million and Pakistan slipped 100,000 to 5.0 million. On the mill-use side, Indonesia added 100,000 bales to reach 2.1 million while the U.S. lost 100,000, falling to 1.5 million.

The global trade forecast increased 436,000 bales to 44.2 million. Indonesia (+100,000 to 2.1 million), Pakistan (+100,000 to 5.1 million) and Turkey (+200,000 to 5.0 million) raised import forecasts; Brazil was the only significant export revision, up 200,000 bales to 15.5 million.

The supply-demand math points to a 2026/27 production deficit of 5.6 million bales — the largest shortfall since 2020/21 — with ending stocks expected to draw down by a similar amount. USDA's mill-use estimates imply back-to-back crop years above 120 million bales for the first time since 2006/07-2007/08.

Demand signals are mixed

For sourcing managers, the critical question is whether spinners will follow prices higher. Two high-frequency indicators currently point in different directions.

China's reserve cotton auctions, running since late July, have routinely sold out their full daily allotments despite repeated increases in auction prices. The newsletter cautions that China's quota system can separate domestic prices from world values, so factors beyond spinning demand may drive auction participation. Still, consistent sellouts suggest real appetite for fiber — and if Beijing eventually turns to world markets to replenish reserves sold at auction, that incremental import demand could tighten exporter stocks and support prices further.

U.S. export sales data tell a more cautious story. Net new sales have come in below 100,000 bales in each of the last two weeks of available data, with no single country adding more than 20,000 bales in either week. Total U.S. export commitment for the current crop year still runs about 20 percent above year-ago levels, but mills appear reluctant to add obligations at current prices.

The historical comparison matters for anyone budgeting fiber costs into 2027 programs. In the two prior periods when prices held above 100 cents/lb — 2010/11 and 2021/22 — downstream demand responded to whipsawing macro conditions and unprecedented stimulus, first fearing demand collapse, then scrambling to secure inventory. Neither dynamic is present today. Interest rates are not near zero, inflation caution persists, and policymakers are discussing rate increases rather than delivering stimulus. There is some evidence of downstream inventory tightness in the U.S., where consumer apparel spending and import volumes have diverged, but inventory positions elsewhere are less clear.

Tighter stocks can support higher prices, but the crop year is young. As the newsletter notes, there is time for the outlook — and for the order books that ultimately set fiber demand — to evolve.