Cotton stocks rise in the forecast, fall over the season

World cotton stocks are expected to fall this season, while the forecast for what remains at the end has risen. The US Department of Agriculture raised its forecast for world stocks at the end of the 2026/27 season to 70.68 million bales, from 69.86 million in September. That is an increase of 820,000 bales in the forecast. Yet the new total remains below the 75.70 million bales estimated at the start of the season. The October 9 WASDE report thus gives exporters more anticipated supply to compete over while mills are expected to draw down the accumulated stockpile.

The monthly revision raises expected stocks relative to the September forecast. The seasonal decline describes the expected gap between supply and use over the marketing year. The two can point in different directions for prices: a tighter annual balance may already have been anticipated, leaving the added stocks as the news.

Mill use drives the expected draw

The USDA’s October 9 world cotton table expects global mill use to exceed production in 2026/27. Its projections put production at 117.95 million bales and mill use at 123.08 million. Both figures are forecasts for the August–July season, subject to changes in harvests and mill demand.

A mill’s purchases depend on orders, financing and the prices of usable fibre. If actual use disappoints, the expected stock draw can shrink. If crops disappoint, a smaller harvest would have to meet those projected purchases. The forecasts therefore depend on demand holding up as much as on the crop arriving.

The geographic distribution adds another qualification. USDA forecasts China holding about 34.7 million bales at season’s end, nearly half the global total. A worldwide aggregate combines cotton held in different countries for different purposes. It cannot tell a buyer exactly how much suitable fibre is immediately offered at the port and delivery date that buyer needs.

Export competition changes the picture

Brazil provides a useful example of why a tighter global balance need not benefit every seller equally. The October balance sheet projects Brazilian exports of 16 million bales, against 12.3 million for the United States. Those are expected shipments, not completed sales. They nevertheless show why an American exporter must examine the offers available from competing origins as well as the total number of bales in the world.

The monthly US revision points the same way. USDA raised projected American production to 13.44 million bales while leaving exports at 12.3 million. Expected ending stocks rose to 3.8 million from 3.6 million. More anticipated output did not automatically become more anticipated foreign sales. The supply increase had to appear elsewhere in the balance.

A producer’s exposure is therefore more specific than a view that cotton will be scarce globally. The producer needs a price for a particular quality in a particular place, after the relevant costs of bringing it to market. The benchmark, local availability and competition from other exporters can pull that price in different directions.

Which cotton can be delivered

Exchange rules make the distinction concrete. ICE’s Cotton No. 2 contract is physically deliverable, represents 50,000 pounds and specifies quality requirements and delivery locations. It does not promise that any cotton anywhere can satisfy the contract. The commodity balance uses standard 480-pound bales; a contract’s pound quantity is a different unit and must be converted before making volume comparisons.

This is why global stocks and exchange-deliverable supply cannot be treated as synonyms. Cotton may exist but be in the wrong location, have different characteristics or be unavailable at the relevant time. Conversely, an adequate local supply can ease a particular delivery constraint even while the global seasonal buffer declines.

For American exporters, the October revision is particularly revealing: a larger expected crop, unchanged foreign shipments and higher stocks to carry forward. The global drawdown offers an incomplete guide to their position. Whether the additional cotton finds buyers depends on mill orders and competing offers, including the Brazilian shipments that USDA expects to exceed those from the United States.