December NY/ICE cotton futures climbed from 84 to 88 cents/lb over the past month, touching 93 cents/lb on August 31 before retreating to about 86 cents/lb in the first half of September, according to Cotton Incorporated's September 2026 economic newsletter. Deferred 2026/27 contracts trade higher than December, with May near 91 cents/lb, while the December 2027 contract sits near 80 cents/lb — an inverted nearby structure that signals tightness in the current crop year rather than long-term scarcity.

The A Index briefly broke 100 cents/lb around the start of September before easing to 96 cents/lb. The China Cotton (CC) Index 3128B rose from 121 to 124 cents/lb between mid- and late August and now trades near 123 cents/lb, or 18,200 RMB/ton, with the RMB strengthening from 6.75 to 6.71 per USD. Indian prices moved from 91 to 94 cents/lb before settling at 92 cents/lb (near 68,900 INR/candy). Pakistani cotton rose from 80 to 85 cents/lb, or 18,300 to 19,300 PKR/maund, with the PKR steady near 277 per USD.

USDA revisions point to a shrinking cushion. The latest USDA 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. Revisions to prior crop years lifted 2026/27 beginning stocks by 502,000 bales to 75.3 million. The net result: projected ending stocks rose 172,000 bales to 69.9 million — still, if realized, the lowest global carryout since 2011/12.

The largest production changes included Brazil (+250,000 bales to 18.5 million), Kazakhstan (+125,000 to 0.5 million), Pakistan (-100,000 to 5.0 million), Turkey (-300,000 to 2.4 million) and the US (-407,000 to 13.2 million). Mill-use revisions were modest: Indonesia gained 100,000 bales to 2.1 million while the US lost 100,000 to 1.5 million. The global trade forecast rose 436,000 bales to 44.2 million, with import gains in Turkey (+200,000 to 5.0 million), Pakistan and Indonesia (each +100,000) and the only significant export increase in Brazil (+200,000 to 15.5 million).

A 5.6-million-bale deficit. USDA's numbers imply back-to-back crop years above 120 million bales of consumption for the first time since 2006/07–2007/08. Combined with the smaller harvest, the 2026/27 production deficit reaches 5.6 million bales — the largest shortfall since 2020/21 — implying a matching drawdown in ending stocks. Tighter stocks can support higher prices, but the season is young and the outlook can still shift.

Two demand indicators deserve sourcing teams' attention. First, China's reserve cotton auctions, running since late July, have routinely sold out entire daily allotments despite repeated price increases. Quota dynamics can distort the signal, notes Cotton Incorporated senior economist Jon Devine, but the strength of sales reflects real appetite — and if China eventually turns to world markets to replenish reserves sold at auction, that import demand could tighten exporter stocks and support prices further.

Second, US weekly export sales have been unusually weak. Net new sales fell below 100,000 bales in each of the last two reported weeks, with no single country adding more than 20,000 bales in either week. Total US export commitments for the current crop year still run about 20 percent above year-ago levels, but mills are clearly cautious about adding obligations at current prices.

Why this rally differs from 2010/11 and 2021/22. In both prior periods when prices held above 100 cents/lb, macro whiplash — post-crisis and post-pandemic stimulus — created urgent downstream inventory buying. Today's environment features no such swing: inflation caution and rate-hike discussion have replaced near-zero rates and massive stimulus. There is some evidence of downstream tightness in the US, where consumer apparel spending and import volumes have diverged, but inventory positions elsewhere are unclear.

The sourcing decision. Mills and their apparel buyers face a market where fiber is supported by the tightest balance sheet in fourteen years, yet downstream order visibility is thin. The data suggests split coverage strategies: securing nearby needs before a potential move back above 100 cents/lb, while avoiding heavy forward commitments until export sales or downstream orders confirm that demand can follow prices higher.