The latest drought monitoring data from the U.S. Department of Agriculture shows that as of July 7, 2026, the drought proportion in U.S. cotton-growing areas reached 55%, a staggering 52 percentage points higher than the 3% recorded during the same period last year. Although slightly down from 56% the previous week, the drought remains at a historically high level for this time of year. As the world's largest cotton exporter, fluctuations in U.S. cotton output directly influence international cotton prices, making this data critical for domestic textile raw material procurement decisions.
The Nature of the Drought: Not a Short-Term Fluctuation, But a Trend-Driven Pressure
U.S. cotton-growing regions are mainly concentrated in Texas, Georgia, and Mississippi, with Texas accounting for nearly 40% of the nation's cotton acreage. The current drought proportion of 55% means more than half of the cotton fields are experiencing water shortages. Last year, the figure was just 3%, making this year's drought nearly 18 times worse. This comparison indicates that the growing conditions for U.S. cotton this season are significantly poorer than in previous years, reflecting not a short-term weather anomaly but a trend-driven drought.
From an agricultural perspective, cotton is particularly sensitive to water availability during the flowering and boll-setting stages. Early July marks a critical growth period for U.S. cotton, and sustained drought directly affects boll development, leading to lower yields. Based on historical experience, if the drought does not ease before August, production losses could range from 10% to 15%. This means there is a significant downside risk to the 2026/27 U.S. cotton crop.
Transmission to Zhengzhou Cotton Futures: Expectations Partially Priced In, But Room Remains
The main Zhengzhou Cotton Futures contract for September 2026 closed at 15,930 yuan per ton on July 9, recovering from earlier lows. This price already reflects some market expectations of reduced U.S. cotton output, but has not yet fully priced in the risk. Historical patterns show that when the drought proportion in U.S. cotton areas exceeds 50%, the main Zhengzhou Cotton contract tends to rise by 3% to 5% in the following month. At 15,930 yuan per ton, the current price level is in the mid-to-low range of the past three years, suggesting significant upward elasticity.
It is important to note that Zhengzhou Cotton prices are influenced not only by U.S. output but also by domestic cotton inventories, downstream demand, and macroeconomic factors. Currently, domestic commercial cotton inventories are high, and Xinjiang cotton supply is ample, which partially offsets the bullish effect of reduced U.S. output. Therefore, buyers should avoid chasing prices blindly and instead build positions in batches based on their order schedules.
Impact on the Textile Supply Chain: Cost Pressures and Procurement Windows
Expectations of reduced U.S. cotton output push up international cotton prices, directly increasing raw material procurement costs for domestic textile enterprises. For mid-to-high-end yarn producers that rely heavily on imported U.S. cotton, the cost pressure is more pronounced. For example, if U.S. cotton prices rise by 5%, the raw material cost for combed 40s yarn increases by about 800 yuan per ton. Since fabric prices adjust slowly, corporate profit margins will be squeezed in the short term.
From a procurement strategy perspective, the current Zhengzhou Cotton price of 15,930 yuan per ton is relatively low. Combined with expectations of reduced U.S. output, this may represent a temporary low-price window. Textile companies with forward orders are advised to lock in some raw material costs in batches during July and August to avoid risks from further price increases. At the same time, close attention should be paid to U.S. weather changes and the USDA's monthly supply-demand reports to adjust procurement timing.