Cotton benchmarks closed September lower across the New York, Chinese, Indian and Pakistani reference points, with the December NY/ICE futures contract falling from 93 to 78 cents per pound between the end of August and the start of October before recovering to roughly 80 cents/lb.

The decline extends a recurring pattern of rallies above 90 cents/lb followed by retreats below 80 cents/lb, leaving sourcing teams and spinners to weigh whether the market can settle into a stable band. Jon Devine, senior economist at Cotton Incorporated, identified the central question in the October economic newsletter: "whether the market can find a stable balance between prices and demand."

How did each benchmark move?

Back-month 2026/27 NY/ICE contracts continued to trade above December. May 2026/27 held the highest level of the curve at roughly 85 cents/lb, while the December 2027 contract slipped to a discount of about 78 cents/lb as the 2027/28 outlook widened the inversion.

The A Index, the leading international physical benchmark, briefly cleared 100 cents/lb at the start of September before retreating to 88 cents/lb and recovering to 91 cents/lb. Inside China, the CC Index 3128B eased from 124 cents/lb (18,400 RMB per ton) to 120 cents/lb (17,200 RMB per ton), with the yuan steady near 6.71 RMB/USD. Indian quotes dropped from 94 to 86 cents/lb, equivalent to a decline from 70,000 to 64,700 INR per candy at an exchange rate near 96 INR/USD. Pakistani prices fell from 85 to 81 cents/lb, or from 19,400 to 18,400 PKR per maund, with the rupee near 277 PKR/USD.

What changed in USDA's supply-demand balance?

The October USDA report lifted 2026/27 world production by 636,000 bales to 118.0 million and mill use by 162,000 bales to 123.1 million. Revisions to prior crop years added 392,000 bales to beginning stocks, taking them to 75.7 million. The net effect was a 822,000-bale increase in 2026/27 ending stocks, now forecast at 70.7 million — a smaller year-over-year drawdown than previously projected.

Brazil accounted for the largest production upgrade, up 500,000 bales to 19.0 million, followed by the U.S. at 13.4 million (+241,000). Argentina was cut 125,000 bales to 1.3 million. On the demand side, Vietnam was the only mill-use revision of 100,000 bales or more, raised to 8.3 million. The 2025/26 estimates saw India lifted 250,000 bales to 26.3 million and Uzbekistan cut 500,000 bales to 3.5 million.

World trade for 2026/27 rose 482,000 bales to 44.7 million, with India's import forecast up 300,000 bales to 3.3 million and Vietnam up 100,000 bales to 8.3 million. Brazil's export number climbed 500,000 bales to 16.0 million.

How weak was mill demand?

USDA weekly export sales tell the clearest story. From Aug. 20 through Sept. 10 — the four-week stretch when NY/ICE December held above 85 cents/lb — cumulative sales for current-crop delivery totaled 302,000 480-pound bales. That volume is less than half the comparable period in 2024/25 (628,000 bales) and 2025/26 (783,000 bales). The hesitancy appears to have contributed to the subsequent price retreat.

What role did China and geopolitics play?

Chinese authorities released more than 400,000 tonnes (1.8 million bales) from state reserves before halting the round of auctions on Oct. 1, with no replenishment plan announced. The sales coincided with reports of stronger-than-expected Xinjiang yields after an exceptionally hot summer, easing earlier supply fears. Chinese prices tracked NY/ICE lower through September.

In late September, U.S. and Chinese leaders met, with cotton on Beijing's suggested list of U.S. exports eligible for tariff reductions. The absence of a purchase-volume announcement deflated expectations of additional Chinese demand and weighed on the market, alongside similar declines in corn and soybeans.

What does the oil-cotton split mean for fiber substitution?

Cotton and Brent crude moved in tandem from the late-February outbreak of hostilities around Iran through July, then diverged. After conflict expanded into the Red Sea region, oil prices rose but cotton declined, widening the price gap between polyester and cotton. Whether mills and downstream buyers shift procurement toward cotton at these relative levels will determine whether the September weakness turns into a sustained sourcing signal or a temporary blip.