Overview
This week's cotton industry news from January 11-17, 2026, highlights a mix of production adjustments, export trends, and ongoing challenges amid volatile markets. In the U.S., focus remains on tightening supplies, farmer exits, and quality-driven demand, while internationally, production shortfalls in key regions like India add pressure. Prices edged higher, with March futures settling around 65 cents per pound, supported by a weaker dollar and USDA revisions. Overall, the sector grapples with oversupply cycles winding down, but demand recovery lags.
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U.S. Cotton Highlights
Market and Price Movements
Cotton futures showed modest gains this week, rising above 65 cents per pound by mid-week before stabilizing. Short covering followed a friendly USDA report on January 13, which cut the U.S. crop estimate by 197,000 bales to 13.9 million bales, driven by a 63-pound drop in yield to 847 pounds per acre. Harvested area increased to 7.805 million acres, but ending stocks fell 7% to 4.2 million bales, tightening the stocks-to-use ratio to about 30%. The PCCA Cotton Market Weekly for January 12 noted March futures settling at 64.41 cents, up 40 points week-over-week, amid improved sentiment but inconsistent follow-through. Daily volume picked up, with open interest rising to 320,684 contracts.
Physical activity increased slightly, with buyer interest ticking up despite price sensitivity. However, strong export sales failed to spark a sustained rally by week's end, as drought concerns persisted. The USDA's January Cotton and Wool Outlook raised the farm price to 61 cents per pound, reflecting the tighter balance. Broader macro caution emerged from Federal Reserve scrutiny, potentially adding volatility.
Production and Supply Updates
USDA's World Agricultural Supply and Demand Estimates (WASDE) for January were supportive, reducing U.S. production to 13.92 million bales, mainly from Delta region cuts. Texas held steady at 5 million bales, while Oklahoma and Kansas saw minor increases. Domestic use stayed at 1.6 million bales, with exports unchanged at 12.2 million, lowering ending stocks by 300,000 bales.
Quality demand drove export momentum. U.S. cotton shipments increased due to foreign mills seeking low-contaminant, high-quality fiber in short supply globally. Weekly exports ending January 1 totaled 154,000 running bales (RB) for Upland, up 10% from the prior week, with destinations like Vietnam (47,800 RB) and Pakistan (28,800 RB). Net Upland sales were 98,000 RB, down 27% week-over-week but led by Vietnam and Pakistan. Pima sales reached 4,300 RB, with shipments at 4,500 RB. Total commitments remain the weakest since 2015, underscoring demand challenges.
The National Cotton Council (NCC) recapped the 2026 Beltwide Cotton Conferences (January 7-9 in San Antonio), emphasizing marketing and processing tech advancements. Trends for 2026 include stable but low prices, with supply-demand equilibrium not shifting dramatically.
Farmer Challenges and Policy Impacts
Southern U.S. farmers face "brutal" losses, with cotton leading commodity collapses alongside rice. Years of deficits have piled up debt, forcing hard decisions: "hang on or get out." The NCC reports an uptick in exits, either voluntary or due to financing denials. Irrigation costs, insurance limits, and global competition exacerbate the downturn.
Policy shifts under President Trump add volatility. Dismantled USAID, deportations of farmworkers, and retaliatory tariffs have slashed demand for U.S. ag products. Higher input costs for seeds and fertilizer, plus competitors like Brazil, strain margins. The $12 billion Farmer Bridge Program offers relief, with cotton and rice seeing top payment rates, but payments won't fully bridge losses. Decision-making has shifted from profitability to survival heading into 2026.
The NCC's latest releases include audio/video resources on leadership and policy. Broader outlook: U.S. farmers, once global feeders, now navigate less federal backing and heightened competition.
International Cotton Insights
Global Supply and Demand
Global production fell to 119.4 million bales, down 355,000, with mill-use up 310,000 to 118.9 million. Ending stocks dropped 1.5 million bales to 74.5 million, tightening stocks-to-use below 63%. China boosted output by 1 million bales to 34.5 million on strong yields, offsetting cuts in India (-500,000 to 23.5 million), U.S., Argentina, and Turkey.
Trade held at 43.8 million bales, with India imports up 200,000 to 3 million. Exports rose for Australia (+200,000 to 5.3 million) but fell for Argentina and Turkey. Softs reports noted quiet trading with slightly lower futures, but good Brazilian conditions and Vietnam harvest sales. Oversupply is easing, with Brazil's CONAB eyeing a 7% production cut.
Regional Developments
In India, production hits a two-decade low, heightening supply shortages amid reinstated 11% import duties from January 1. CITI urged duty removal, projecting a drop to 317 lakh bales (slightly higher year-on-year per some estimates), with Maharashtra and Telangana gains. U.S. tariffs (50% since August 2025) squeeze margins, making buyers cautious; cotton yarn offers fell in north India. Peak production is down 20%, shifting India to net importer ($600 million).
Indonesia introduced safeguard duties on cotton fabrics from January 10 to protect textiles from imports. Pakistan's sector struggles with high taxes and costly raw materials, leading to closures. Global fundamentals from Cotton Incorporated echo tightening, with A Index near 74 cents/lb and Chinese Index rising to 103 cents.
Looking Ahead
The cotton market shows signs of tightening, but demand hurdles and policy uncertainties persist. U.S. farmers need sustained export growth and support programs, while international shortfalls could boost opportunities. Seasonality favors firmness into March. Stay tuned for inflation data and WASDE impacts.
