Cotton futures reach 28-month high as drought and heat threaten global supply
ICE cotton futures reached 89.30 cents per pound, their highest level in 28 months, as weather risks and a projected global production deficit supported prices. USDA estimates cited by Ekonomi Gazetesi put consumption at 122.9 million bales and production at 117.6 million bales.
Futures rise as consumption overtakes production
ICE cotton futures climbed to 89.30 cents per pound last week, their highest level in 28 months, according to Ekonomi Gazetesi. Prices increased 8.93% over the month and 32.94% from a year earlier. The rally reflects both speculative fund buying and concern that the balance between global cotton supply and demand is tightening again.
US Department of Agriculture estimates for August, cited by the publication, put global cotton consumption at 122.9 million bales, the highest level in six years. Production is forecast to fall to 117.6 million bales. That would leave consumption 5.3 million bales above output, creating the prospect of a significant deficit and faster depletion of global inventories.
The projected shortfall matters across the textile supply chain. Cotton growers could benefit from stronger prices, but mills, yarn producers and apparel manufacturers face higher raw-material costs. Traders and importers must also manage greater price volatility as the market responds to changing crop conditions and physical demand.
US crop conditions and Xinjiang acreage raise concern
Weather is the main source of production uncertainty. In the United States, the share of cotton rated good to excellent fell from 46% two weeks earlier to 40% the following week and then to 38% in the latest data. Drought and high temperatures in important growing areas are increasing concern about yield losses and a weaker harvest.
Expectations that El Niño conditions could strengthen through September are keeping weather risk in focus. China is adding another supply concern: planted cotton area in Xinjiang has reportedly been reduced by more than 10%. The region is central to Chinese production, so a meaningful acreage contraction could affect domestic availability and demand for foreign fiber if yields do not compensate.
Trade indicators also support the firmer outlook. US export commitments have reached 4.235 million bales, while Vietnam’s imports are expected to rise to 8 million bales, Ekonomi Gazetesi reported. These figures suggest that demand from major textile-processing markets could absorb more exportable supply even as production expectations weaken.
Fund positioning amplifies the price movement
Investment funds have increased their net long position to 78,668 contracts, adding momentum to the rally. That positioning can accelerate gains when supply concerns intensify, but it also makes the market vulnerable to profit-taking. A rapid reduction in long positions could produce a sharp correction even if the underlying production outlook remains tight.
Demand risks have not disappeared. Low textile-sector capacity utilization in China and Turkey could limit cotton consumption. A slowdown in global clothing expenditure would also weaken the stronger consumption projections. Competition from polyester remains sensitive to energy prices: sustained high energy costs could favor cotton by raising synthetic-fiber production costs, while cheaper oil could restore polyester’s price advantage.
Market looks toward 90-92 cents per pound
Analysts cited by Ekonomi Gazetesi identify 90-92 cents per pound as a target range for the final quarter of the year. Prices could move above that band if US and Chinese harvests disappoint, global stocks fall more rapidly and physical demand stays firm. March-May 2027 futures are already trading between 90.40 and 91.35 cents per pound, indicating that the market does not view the higher price environment as necessarily temporary.
