Highlights

  • ICE Cotton No. 2 futures traded at 78.26 US cents a pound on Wednesday, down 0.43 cents.
  • USDA lowered 2026/27 US cotton production to 13.18 million bales from 13.44 million and cut ending stocks to 3.70 million.
  • The US harvest reached 71% by 8 November against a five-year average of 63%, adding seasonal selling pressure.
  • Gildan cut its 2026 Revenue guidance to $5.4-5.5 billion from $6.0-6.2 billion amid slower demand.

USDA cut the American cotton crop, and the market barely blinked. ICE Cotton No. 2 for December delivery traded at 78.26 US cents a pound on Wednesday 11 November, down 0.43 cents, a day after USDA trimmed 2026/27 US production to 13.18 million bales from 13.44 million. A harvest running ahead of schedule, Brazilian export competition and soft Chinese buying all tug the other way. For Gildan (TSX:GIL) and Levi Strauss (NYSE:LEVI), cotton is a cost line, not a revenue line.

USDA Trims the US Crop

The November Supply and Demand report, released on 10 November, cut US ending stocks to 3.70 million bales from 3.80 million, left exports unchanged at 12.30 million bales and lowered the season-average upland farm price by one cent to 76.0 cents a pound. Globally, USDA cut 2026/27 production to 117.48 million bales from 117.95 million and consumption to 122.75 million from 123.08 million. World ending stocks were trimmed to 70.57 million bales, with larger Chinese production partly offsetting declines elsewhere.

The market response was muted. One possible explanation is that a smaller US crop was partly expected and that lower global consumption offsets some of the supply cut, but no single cause is evident.

Harvest Pressure and Export Competition

The US harvest is running ahead of schedule, with 71% of the crop in by 8 November against a five-year average of 63%. Peak harvest often brings seasonal selling as farmers market their crop.

Brazil is a growing competitor. Its trade group forecasts shipments of about 3.4 million tonnes, against USDA's 2.69 million tonnes for US exports. US-China trade talks have not yet produced meaningful Tariff relief, so Chinese buyers are purchasing fewer foreign supplies, and the expected autumn recovery in Chinese textile demand has not materialised. Some support comes from US upland export sales of 277,500 running bales in the week to 29 October.

Currency, Stocks and Positioning

A stronger dollar makes US cotton more expensive for overseas mills. In late October cotton fell as the dollar index rose and ICE certificated stocks increased to 27,865 bales, which can signal more deliverable supply.

The longer-term picture is less weak than recent sessions suggest. The front-month price is about a quarter higher than a year earlier, when futures traded in the low to mid-60s, so mills and apparel makers are paying more for fibre than in late 2025. December's first notice day is 23 November, and traders typically roll into March before then, so continuous charts may soon switch to the March 2027 contract, which traded at a premium to December in late October.

Company Exposures

Lower cotton prices can ease clothing makers' costs, although the effect usually arrives with a lag because of forward buying and inventory.

Gildan is a vertically integrated basic apparel maker and, since December 2025, the owner of HanesBrands. Third-quarter net sales rose 61.1% to $1.47 billion, largely because of the acquisition, but it cut its 2026 revenue guidance to $5.4-5.5 billion from $6.0-6.2 billion amid slower demand. Demand, rather than fibre cost, appears to be the main pressure on its outlook. In October it sold HanesBrands Australia for about A$700 million.

Levi Strauss makes denim jeans and other apparel in which cotton is the principal fibre.

What Could Move Prices

Prices could firm if Chinese buying improves after any US-China tariff relief, if late-season weather damages the remaining crop, or if export sales keep strengthening. They could weaken if harvest selling accelerates, Brazil wins more export share or the dollar strengthens, and further cuts to global consumption estimates would weigh on sentiment.

Watch weekly export sales, Monday crop progress, Friday's CFTC positioning data and the December roll. The next USDA supply and demand report arrives on 10 December.