Cotton is facing supply chain issues due to its intricate structure and winding trade routes where raw and finished cotton products often cross several international borders before reaching the end consumer. Since the supply chain is already longer and more complex than it is for most other commodities, external factors can easily make a bad situation even worse. With incoming tariffs, counter-tariffs, shifting trade patterns and political questions coming into play (for example, security concerns surrounding the Suez Canal); significant logistical delays are a real consequence in the not-so-distant future.
We asked Lorena Ruiz, economist at the International Cotton Advisory Committee, to help us dig into the convoluted cotton landscape.
Q: Cotton prices are near a five-year low. What’s the outlook on prices going forward?
LR: The outlook for prices is murky. While prices are relatively stable within recent ranges, they are underpinned by weak global demand, elevated stocks and high uncertainty. One of the key risks we’re monitoring is the potential for a global recession. If realized, that could suppress consumer spending on discretionary items like apparel—cotton’s primary end use. We’re also watching how global cotton area responds to current price signals, developments in the U.S.-China trade relationship, and broader macroeconomic indicators, particularly exchange rates and the strength of the U.S. dollar.
Q: Have the tariff announcements impacted demand?
LR: Cotton is a globally traded commodity and its supply chain is highly interconnected. The recent tariff announcements have created uncertainty and hesitation throughout the textile and apparel value chain. Buyers are delaying orders or shifting sourcing strategies, which is inhibiting short-term demand and contributing to market instability.
Q: If the tariffs do indeed go into effect, what does that mean in both the short and long term?
LR: In the short term, we expect continued disruptions to trade flows. In the long term, prolonged tariffs are likely to accelerate the diversification of sourcing, shifting trade volumes toward suppliers like Brazil, Australia and West Africa. However, this adjustment won’t happen overnight, and the uncertainty could continue to weigh on investment and purchasing decisions across the value chain.
Q: Sourcing currently is quite volatile. How insulated is the cotton market?
LR: Tariff policy has a direct and immediate impact, especially for a globalized commodity like cotton. However, because the U.S.–China cotton trade was already reduced, there is less exposure to major cancellations than in past disputes. Still, the market remains vulnerable overall due to its reliance on smooth trade flows across multiple countries and stages of production.
Q: What is the forecast for U.S. cotton production—and for the rest of the world’s cotton-growing regions?
LR: In the 2024/25 season, U.S. cotton production is projected to increase by 17 percent, reaching 3 million tonnes. This would reinforce the U.S. position as the world’s second-largest cotton exporter, accounting for approximately 24 percent of global export share. However, early USDA projections for 2025/26 suggest a 12 percent decline in planted area, as growers respond to weaker price signals and elevated input costs. Globally, for the 2024/25 season, production is expected to rise in Brazil and China, while India and Pakistan are facing anticipated declines due to adverse weather conditions and pest-related challenges.
Q: Explain the reasoning for decreased import demand from China—can it be offset from other regions?
LR: In 2024/25, China’s cotton production rose by 16 percent, reaching 6.5 million tonnes, the highest level in a decade. With domestic mill use remaining relatively stable, China’s import needs are projected to fall by 50 percent. At the same time, the USA remains China’s largest supplier of cotton textiles and apparel products. However, significantly higher tariffs on U.S. imports are expected to reduce that demand. While countries like Bangladesh, Vietnam and Turkey are expected to increase their imports, these gains won’t be enough to fully offset the decline from China. Given that China accounts for approximately one-third of global cotton demand, reduced import activity from China has major implications for the overall market balance.
Q: What can brands and retailers do to mitigate against volatility?
LR: While farmers and merchants are most directly exposed to cotton price volatility, often relying on hedging tools like futures to manage risk, brands and retailers experience indirect effects, including cost fluctuations, delivery delays and supply chain disruptions. In response, many are diversifying sourcing regions, deepening long-term supplier partnerships and investing in supply chain traceability. Some are also exploring vertical integration to reduce dependence on long, complex trade routes. Given cotton’s role as a renewable and biodegradable natural fiber, ensuring responsible and resilient sourcing is becoming a core strategic priority for global brands.
