The primary cotton-growing regions in the United States are facing a historic drought. According to the latest USDA drought monitoring data, as of July 7, 2026, 55% of cotton-producing areas were experiencing drought, down just 1 percentage point from the previous week but a staggering 52 percentage points higher than the same period last year. This means over half of the cotton fields are under significant water stress during a critical growth phase.
This data directly impacts the global cotton price center. As the world's largest cotton exporter, US production fluctuations are a key variable in international cotton pricing. The sharp increase in drought coverage implies a substantial downward risk for the 2026/27 US cotton crop. For Chinese textile mills, US cotton is a vital import source, and production cut expectations will directly raise import costs, cascading to domestic yarn, fabric, and even finished garment pricing.
Regional Drought Conditions
Looking at the details, the current drought's extent and year-on-year deviation are rare in recent years. The 55% figure means most major US cotton regions—from West Texas to California—are water-deficient. While the weekly decline of 1% might come from local rains, the overall drought shows no trend of easing. Last year's 3% drought rate contrasts sharply with 2026's near cliff-like deterioration.
For farmers, drought directly threatens yields. Cotton is highly sensitive to water during squaring and blooming; drought causes boll shedding, shorter fiber length, and lower maturity. Even if rains return, the damage is partially irreversible. Market expectations for a US cotton production cut have shifted from 'possibility' to 'high probability,' sustaining bullish sentiment for ICE cotton and Zhengzhou Cotton Futures.
Industry Impact
The drought's impact transmits through multiple layers. First, the spot market: cotton suppliers are tightening sales, with some holding stock for higher prices. Production cut expectations fuel hoarding sentiment, keeping spot quotes firm. Second, the futures market: the Zhengzhou Cotton Futures main contract (2609) closed at 15,930 yuan/ton on July 9, significantly up from earlier lows. The bullish news and fund inflows create a feedback loop, making futures prices prone to upward moves in the short term.
For downstream textile mills, cost pressure is mounting. Spinning mills face the dual squeeze of rising raw material costs and lagging price pass-through to final orders. Small and medium-sized mills, lacking long-term price locking capabilities, will see their profit margins further compressed if cotton prices keep rising. Some may reduce operating rates or switch to alternative fibers like polyester staple fiber, altering the cotton-textile supply-demand structure.