Overall, 2025 was another challenging year for the U.S. cotton industry due to low prices, high production costs, and weak demand. In the early months of 2026, these same factors are still impacting the U.S. and world cotton outlook.

U.S. Cotton Economic Situation
We will begin with a review of the current economic situation for U.S. growers.

2025 – 3rd Year of Costs Exceeding Prices
Producers continue to face high prices for most production inputs. Current production costs are over 30% higher than in 2018 and the financial situation of U.S. cotton growers continues to deteriorate with market prices well below production costs. Many growers have suffered deep losses over the past three years. Current futures prices suggest a similar outlook for 2026.

Farm Policy Support
However, farm policy changes included in the One Big Beautiful Bill as well as additional economic assistance will provide much needed support this year.

Economic Assistance and PLC Payments
Cotton growers will receive $117 per acre in Farmer Bridge Assistance payments at the end of this month. Starting with the 2025 crop year, the seed cotton reference price increased to 42 cents per pound.  Based on the latest data released on Tuesday, the seed cotton PLC payment for cotton is about 9 cents per pound.

The 2025 crop year PLC payments will be disbursed in October 2026.  The 2025 marketing year runs through July 31 so we still have 6 months remaining in the price calculation. Based on current estimates, the seed cotton PLC payments for 2025 are shown in this table. For a lint PLC payment yield of 800 pounds per acre, the PLC payment would be $148 per base acre. 

For the 2026 crop year, PLC payments will be disbursed in October 2027.

Additional Farm Policy Support
Starting with the 2026 crop year, a higher loan rate of 55 cents per pound along with other key marketing loan improvements will provide additional support. 

Eligible farms will have the opportunity to add new base acres in 2026 if planted acreage on a farm is greater than current base. You can find more details and base update examples on the NCC website.

Additional benefits for the U.S. textile industry include an increase in the EAATM payment from 3 to 5 cents per pound. MAP and FMD funding was also doubled.

Another important change is enhanced coverage and higher premium subsidies for area-wide insurance policies.

Cotton Program Support for 2026 & Beyond
The cotton farm policy program includes support tied to base acres and planted acres. Cotton base acres are enrolled in the ARC or PLC program. Growers have the option to purchase individual or area-wide insurance to cover planted acres. Prior to the 2026 crop year, many cotton growers enrolled in the STAX program. However, if seed cotton base on a farm was enrolled in ARC or PLC, the farm was ineligible for STAX coverage. So, each year, producers had to choose between ARC or PLC and STAX.

Starting with the 2026 crop year, the SCO and ECO programs provide similar STAX coverage at the same cost and do not have ARC and PLC restrictions. Producers need to take a close look at these programs for the 2026 crop year.

Cotton Supply
Now, we will review potential supply for the 2026 crop year.

NCC Acreage Survey
The 2026 survey was distributed on January 1 with responses collected through January 26. Respondents were asked to provide their plantings of cotton, corn, soybeans, wheat, sorghum, peanuts, and ‘other crops’ for 2025 and intended acreage for 2026. As always, the survey results should be viewed as a measure of grower intentions prevailing at the time the survey was conducted.

Pre-Planting Market Signals
Relative to the average futures prices in the first quarter of 2025, cotton prices during the 2026 survey period were about the same, corn prices were slightly lower and soybean prices were about 4% higher. As a result, the cotton-to-corn price ratio was slightly higher and the cotton-to-soybean price ratio was lower during the 2026 survey period. Since the survey period, cotton prices are a bit lower while corn and soybean prices are slightly higher. Historically, these price ratios have been a good indicator of acreage movements. With that in mind, I will begin with a review of the Southeast.

2026 Southeast Acreage
Southeast respondents indicated a 4.9% decline in cotton acreage to 1.6 million. Acreage is expected to decline in all states except Alabama. Georgia growers expect to reduce acreage by 3.6% to 805 thousand acres. Georgia’s 2025 acreage of 835 thousand was the lowest level since 1993 and only the fourth time that GA growers planted less than 1.1 million cotton acres in the last 30 years. According to the survey responses from Southeast growers, the expected decline in cotton acres is due to an increase in corn, soybeans and other crops. Georgia and Virginia growers reported little to no change in peanut acres, while the other Southeast states expect to reduce peanut acreage in 2026.

2026 Mid-South Acreage
Mid-South growers intend to plant 1.2 million acres of cotton, a decline of 20.6% from the previous year. The expected decline is mostly due to an increase in corn and soybeans.

2026 Southwest Acreage
Southwest growers indicated a small increase in cotton acreage of 1.6%. Growers in Kansas expect to increase acreage by 9.6% while Oklahoma growers expect to increase acreage by 15.7%. Texas growers report very little change from 2025. South Texas growers expect to plant more cotton and corn and less sorghum. West Texas growers reported a slight increase in cotton acres, less corn, and more wheat, sorghum, and other crops.

2026 West Acreage
With intentions of 125 thousand acres, producers in the West expect to plant 7.2% less acres of upland cotton. Upland acreage is expected to decline in all states in the West. According to the survey responses, California growers expect to plant less cotton, corn, wheat, and more other crops. In Arizona, growers expect to plant less cotton, corn, wheat, other crops, and more sorghum.

2026 ELS Acreage
ELS acreage is expected to increase to 161 thousand acres in 2026. Arizona, California and Texas growers expect to increase acreage in 2026, and New Mexico growers expect to reduce ELS acreage.

2026 U.S. Cotton Acreage
Survey results indicated that U.S. growers intend to plant 9.0 million acres of cotton this spring, down 3.2% from last year. Upland intentions are 8.8 million acres, down 3.4%, while ELS acreage is expected to increase by 14.0%.

The survey results reflect the current financial condition of U.S. cotton growers. For the fourth year in a row, costs are projected to exceed market revenue and while the farm safety net will provide higher support this year, more assistance will be needed to cover all losses.

U.S. Drought Monitor
Planted acreage is just one of the factors that will determine supplies of cotton and cottonseed. Ultimately, weather events, insect pressures, and agronomic conditions play a significant role in determining crop size.

Since the NCC economic outlook does not attempt to forecast weather patterns, the standard convention is to assume yields in line with recent trends and abandonment consistent with historical averages. Looking at the latest U.S. drought monitor map, as compared to this same time last year, drought conditions are more severe in most areas of the Cotton Belt, with the exception of the West, which is a bit unusual. But since it is still too early to make predictions on unharvested acres, average abandonment levels were assumed for the 2026 outlook.

U.S. Cotton Production
Based on the NCC survey results, U.S. harvested area is estimated to be 7.1 million acres with an overall abandonment rate of 21.3%. U.S. production is estimated to be 12.7 million bales, which includes 12.3 million upland bales and 393,000 ELS bales.

World Harvested Area
World harvested area has continued to decline over the past 4 years. Harvested area in 2025 was the lowest level since 1986.  With low prices, another decline in harvested area is expected. If realized, 2026 harvested area would be the lowest level in over 60 years based on available data.

World Production
With lower area, world production is projected to decline to 114.1 million bales in 2026.

Production by Country
All major cotton growing countries are projected to have lower production in 2026 due to lower acreage and in some cases, lower yields.

The two main competitors for U.S. cotton are Australia and Brazil and both are expected to have lower production in 2026. Australia could have an even larger drop due to water availability. Brazil is expected to reduce acreage slightly due to lower prices. Over the last decade, Australia’s production has had little expansion while Brazil’s production has increased by almost 13.0 million bales.

Production by Country
The two largest cotton producing countries are China and India. China is expected to reduce acreage this year and yields are expected to be closer to average levels. The USDA yield estimate for 2025 is a record level of over 4.5 bales per acre. Based on recent policy discussions, China may move toward a structural reduction in cotton acreage to align with market demand and optimize allocation of ag resources.

India’s production has declined over the last decade with declining to stagnant yields over time.

Cotton Demand
Now, I will review the current demand situation.

World GDP – Stable to Slowing Growth
Historical data shows a strong correlation between cotton consumption and global GDP growth. The International Monetary Fund has projected stable to slowing economic growth of 3.3% in 2026 and 3.2% in 2027.

World Cotton vs. MMF Consumption
Cotton continues to face strong competition from man-made fibers.  Man-made fiber consumption has increased while cotton’s share of overall consumption has declined from about 40% in 2000 to 20% in 2025.

Fiber Prices
As you can see here, China polyester prices are significantly lower than cotton prices.

World Consumption
Despite the demand challenges mentioned in the previous slides, world consumption is projected to increase by 1.0% in 2026 to 120.0 million bales.

Consumption by Country
Now, let’s take a closer look at demand in major cotton consuming countries.

Overall, six countries account for over 80% of consumption. China’s cotton consumption has remained relatively flat as their man-made fiber use and production continues to expand. Higher production and stronger yields will result in less reliance on cotton imports.

India’s consumption has remained relatively flat over the last few years but a slight increase is projected for 2026. Weak domestic demand and reduced exports of textile products, partly resulting from trade policy, has impacted consumption.

While a slight increase is projected for this year, Pakistan’s textile industry has struggled in recent years due to volatile global demand as well an increase in production costs.

Bangladesh has also grown over the last decade and continues to expand. Vietnam has had significant growth over the last decade and continues to expand.  Turkey’s consumption has remained stable over the last decade but mills are struggling with higher production costs.

Looking at consumption within this hemisphere, mill use for the U.S. is expected to remain relatively stable, a slight increase is expected for CAFTA-DR countries, while Mexico consumption has struggled in recent years.

Cotton Trade
Now, we will review U.S. and world cotton trade.

U.S. Export Sales Commitments
USDA’ s current export estimate for the 2025 crop year is 12.0 million bales as compared to 11.9 million bales last year. However, based on current sales commitments, this seems quite optimistic. The U.S. continues to face strong export competition from Brazil and China’s purchases of U.S. cotton have remained low during the 2025 crop year. Current U.S. export sales commitments are at the lowest level since 2015.

As a result, a U.S. export level of 11.7 million bales was included in the 2025 NCC balance sheet. However, to reach 11.7 million bales, late season sales activity will have to increase to levels similar to the 2009, 2015 and 2016 crop years.

Export Competition in the Global Marketplace
As I mentioned earlier, the U.S. continues to face strong competition from Brazil and Australia.  However, in 2026, lower projected production in Brazil and Australia would result in a slight increase in the U.S. share of world exports.

Changes in trade policy could also impact the demand for U.S. cotton. The 2026 outlook assumes current policy is in place.  We are starting to see new agreements which could allow U.S. cotton to be more competitive in the world market. The Buy American Cotton Act could also be a game changer for the U.S. cotton industry.

U.S. Textile/Apparel Trade
Now, we will review U.S. textile and apparel trade.

Share of U.S. Textile & Apparel Imports
Each year, between 18 to 20 million bale equivalents of cotton products are imported into the United States. With the current trade policy environment, the share of cotton imports from various countries has changed. As you can see here, China’s share has declined while the share from most other countries has increased.

For our U.S. textile industry, the largest export markets for U.S. yarn and fabric include CAFTA-DR countries, accounting for about 68% and USMCA countries accounting for 20%.

Balance Sheet
Now, we will turn our attention to the U.S. and world balance sheets.

U.S. Balance Sheet
U.S. ending stocks are currently projected to decline to 3.4 million bales for 2026. For 2026, U.S. mill use is projected to drop slightly to 1.55 million bales. A projected increase in world consumption along with lower world stocks results in a larger U.S. export projection of 12.5 million bales in 2026.

World Balance Sheet
With expanded consumption in key importing countries, world trade is projected to increase in 2026. Higher world consumption and lower production result in a 5.8 million bale decline in ending stocks to 69.6 million bales. 

World Consumption – Production
It is important to note that in prior years when consumption was significantly higher than production, we have generally experienced a larger price increase in the following year.

Final Thoughts
If world consumption can overcome the headwinds from the sluggish global economy and cheaper man-made fibers, declining stocks in the 2026 balance sheet could provide some support for prices.

However, with trade uncertainty, it may take some time for prices to recover. The enhanced farm safety net will provide much needed support while prices remain low.

New trade agreements that may include purchase commitments or the implementation of the Buy American Cotton Act could improve demand and prices for U.S. cotton in the near future.