China Draws on Large Stocks While Other Importers Compete for Scarce Cotton

Brazil overtook the United States as the leading exporter in 2023/24, a rise the USDA links to lower US production after recent droughts. In the 2025/26 commercial year it exported a record 3.37 million tonnes of cotton, up 19% on the year before, against about 2.68 million tonnes from the United States, a lead of roughly 700,000 tonnes. Extra tariffs on American cotton in China then widened a lead that drought in the United States had opened.

The crop behind that lead grows mainly in the Centre-West, led by Mato Grosso. El Niño's typical pattern sends frequent fronts through Argentina that tend to stall over southern Brazil, bringing above-normal rain there, while disrupting the circulations that deliver daily rain to central and northern Brazil. Mato Grosso lies in the zone El Niño tends to leave short of rain. The extra rain falls largely south of the cotton belt.

Most of Brazil's cotton is planted straight after the soybean harvest, so the cotton calendar depends on how the soybean crop develops. StoneX expects an increased dryness risk in the Centre-West, which can delay soybeans and push cotton planting later, into hotter conditions. It projects Brazilian planted area up 4.4% and production down 1.5%, to about 3.83 million tonnes. Together those figures imply yields roughly 6% lower than last season, and StoneX's base case puts them at about 1.85 tonnes per hectare. Growers are adding area because the recovery in cotton prices has made the fibre more competitive against rival crops.

Conab expects planted area to rise 3.68% to 2.09 million hectares but productivity to fall 3.23% on uncertainty over El Niño's effects, leaving production almost flat (up 0.33%); Mato Grosso accounts for the largest absolute increase in area of any state. Abrapa, the growers' association, put the crop harvested this year at 3.90 million tonnes, 8.2% lower than the year before on 8% less land. The El Niño crop starts from a reduced base.

The USDA's figures run on a different calendar. Its 2026/27 marketing year covers the cotton harvested in mid-2026, which its September estimates put at 18.5 million bales after a smaller harvested area and a record yield, with exports level at 15.5 million bales. That is the cotton Brazil will ship this season. The crop El Niño threatens is the one Conab and StoneX are forecasting, and StoneX expects it to cut Brazil's exports by 7.6%, to about 3.05 million tonnes.

The two forecasters that cite the weather, Conab and StoneX, both expect each hectare to yield less, and neither expects area growth on the scale that rescued the 2023/24 crop: about 4% this season (3.38% in Mato Grosso), against 16.9% then. Area growth that small cannot offset a yield fall of the size StoneX projects. On their figures, Brazil is planting more land to stand still or fall back.

The USDA's September estimates put China's 2026/27 production 6% lower at 33.5 million bales, US output 5% lower at 13.2 million after a further cut in September, Pakistan's about 6% lower at 5.0 million and Australia's down by a third, or 1.5 million bales, to 3.0 million. India alone is projected to grow more, by about 200,000 bales to 24.0 million, a gain that would cover less than a seventh of Australia's fall. Its monsoon rainfall was 16% below normal in August. Spare cotton outside Brazil is scarce.

Brazil's largest buyers depend on it to very different degrees. Converted to bales and set against the USDA's estimates of each country's 2025/26 imports (approximate, since Brazil's marketing year and the USDA's differ slightly), Brazilian cotton supplied roughly half of China's imports, about 43% of Turkey's and of Pakistan's, 37% of Bangladesh's, a third of India's and 22% of Vietnam's.

The direction of change also differs: Bangladesh bought 173,200 tonnes more from Brazil in 2025/26, while Vietnam and Pakistan bought 137,400 and 79,200 tonnes less. India's purchases from Brazil rose more than 40-fold over two years, helped by a temporary suspension of import duties. Bangladesh and India are moving towards Brazil.

Stocks decide how long a buyer can wait. China ended 2025/26 with an estimated 36.2 million bales, about half the world's total and roughly ten months of its mill use, and the USDA expects it to cut imports to 7.0 million bales in 2026/27 by drawing on them; even then, its 2026/27 stocks would be the lowest in four years. The largest buyer of Brazilian cotton is also the best insulated.

The other buyers hold far less. Turkey's stocks covered about two months of use, Pakistan's two and a half and Bangladesh's under three; Vietnam's covered about six weeks. Yet the USDA's September estimates have Turkey, Pakistan and Bangladesh importing more in 2026/27 than in 2025/26, by about 6%, 16% and 3% respectively.

For the other buyers, the alternative origins are shipping less or, at best, no more. The USDA projects Australia's exports falling from 5.6 million bales to 4.5 million and US exports flat at 12.3 million. India, the one producer forecast to grow more, is projected to import 3.0 million bales and export 1.5 million. It is also the producer that halted exports in 2012.

Turkey and Pakistan draw more than two-fifths of their imported cotton from Brazil, Bangladesh more than a third, and none holds three months of stocks; all three are importing more. A yield loss in Mato Grosso would reach those three first.