Global cotton industry faces 2025 strains as supply outpaces demand

The global cotton industry is expected to face a challenging 2025, with production outpacing demand and limited global economic growth. As per the Centre for Advanced Studies on Applied Economics (CEPEA), cotton futures suggest price stability, even as oil prices trade lower and economic growth matches last year’s pace.

Brazil ended 2024 as the leading cotton exporter, shipping 2.77 million tons and surpassing the US 2.37 million tons. Key to this achievement was China’s robust demand, with imports of 924.7 thousand tons. However, Brazilian cotton prices may face downward pressure in 2025 due to high ending stocks and modest global demand. A weaker Brazilian real against the US dollar could enhance export competitiveness, potentially offsetting price declines.

Conab which is under the Ministry of Agriculture in Brazil, projects cotton planted area to expand by 3 per cent in 2024/25, reaching 2 million hectares. Despite this, productivity may decline by 3.1 per cent to 1,845 kilos per hectare, with total production expected at 3.695 million tons, a slight 0.2 per cent drop from last season.

Globally, USDA forecasts a 3.9 per cent rise in cotton supply to 25.558 million tons for 2024/25, while consumption is projected to grow by 1.3 per cent to 25.211 million tons, highlighting ongoing supply-demand imbalances.