Market Forecast: Cotton Consumption In The Next Year Will Hit The Highest Level In Five Years

According to the supply and demand forecast of the US Department of Agriculture in May, the global cotton consumption in 2025/26 is expected to increase slightly year-on-year, reaching 118.1 million bales, the highest level in nearly five years. Adequate cotton supply will limit the rise of cotton futures prices and provide support for cotton consumption. Cotton consumption is expected to grow for the third consecutive year, but the growth rate is still lower than the trend line, because the competition from chemical fiber and macroeconomic uncertainty will limit cotton consumption.

In 2025/26, an important factor for stabilizing cotton consumption is that the replenishment of cotton supply chain will remain stable. Three years ago, the pressure of finished goods inventory of wholesalers and retailers in developed countries put pressure on cotton consumption in 2021/22 and 2022/23. Since then, the obvious decline in stocks has led to the recovery of cotton consumption in the following two years, and this trend will continue in 2025/26.

Global cotton consumption is closely related to the import volume of cotton products, and fiber consumption is an omen of future product imports. The import volume of cotton products of major importing countries in the latest year was about 7.7 million tons, higher than 6.9 million tons in the previous year. This figure is consistent with the average value of the past decade, indicating that the inventory does not need to be digested as soon as possible. Under the expectation that cotton consumption is expected to remain stable in 2025/26, cotton product imports are expected to stabilize at the average level in the past decade, which is completely different from the year-on-year changes in cotton consumption since the epidemic.

The United States is the country with the largest import volume of cotton products. The stable disposable income of consumers, the low unemployment rate and the stable wage guarantee are expected to provide support for the consumption of end products (clothing and home textiles, etc.). In 2024, American consumer demand will be very resilient, and the real GDP growth will exceed the expectation, reaching 2.8%. However, at present, the Federal Reserve predicts that the US GDP growth will fall to 1.7% in 2025 and 1.8% in 2026.

Since the United States accounts for a large proportion of global cotton product imports, the economic growth of the United States is crucial to cotton demand. The import volume of cotton products in the latest year reached 3.3 million tons, accounting for more than 40% of the total import volume of developed countries, higher than the 2.9 million tons of EU and 1.6 million tons of other countries. Due to the huge influence of the United States on the demand for end products, it is expected that the stable U.S. economy will keep retail product orders stable.

Cotton consumption is positively correlated with the year-on-year change of global GDP. However, cotton consumption and GDP do not always follow this trend. As alternative products (such as synthetic fibers and man-made fibers) account for the majority of global fiber consumption, cotton demand changes more flexibly. The International Monetary Fund predicted in its World Economic Outlook in April 2025 that the global GDP would grow by 2.8% in 2025 and 3.0% in 2026. The growth in 2025 would be lower than 3.3% in the previous year, and the GDP growth of the United States and China would decline the most.

The increase in global cotton supply is expected to provide support for cotton consumption. In 2025/26, the sum of global initial inventory and output is expected to exceed 196.2 million packages, with a year-on-year increase of about 1.4 million packages, the highest level since 2020/21. The reduction of production costs, financing costs and energy costs of cotton mills will also provide support for cotton consumption. At the same time, low cotton prices, lower interest rates, the depreciation of the US dollar, lower oil prices and increased supply will also support the profit margin of the factory.

The uncertainties of global consumption in 2025/26 include the final global cotton output, changes in cotton prices, and future trade policies. Although the global economy is expected to maintain positive growth, the market is still worried about the decline of economic growth in the United States and China. For China, it is still unclear whether exports can continue to offset the uncertainty of domestic demand. Other potential negative factors include the uncertainty surrounding tariffs, which leads to more risk averse global trade.

Finally, cotton consumption will continue to face competition from other fibers. The more competitive price of synthetic fiber will continue to put pressure on cotton consumption, and the future price relationship will affect the replacement speed of other products. In recent years, the growth of synthetic fiber supply has greatly exceeded the growth of cotton consumption, and this trend may continue, although the global cotton consumption is expected to increase slightly in 2025/26.