The U.S. cotton belt is experiencing a drought of rare severity in recent years. According to the latest USDA data, as of July 7, 2026, 55% of U.S. cotton-producing areas are under drought conditions. Although this figure is down 1 percentage point from the previous week, it represents a staggering 52 percentage point increase from the 3% recorded during the same period last year. This means that more than half of the major U.S. cotton-growing regions are currently water-stressed, and the potential impact on cotton yield and total output cannot be underestimated.
Drought Area Hits Record Level, Production Cut Expectations Intensify
In absolute terms, the 55% drought ratio ranks among the highest for this period in the past decade. Last year, the figure was just 3%, making this year's reading nearly 18 times higher. Although the week-over-week change shows a slight improvement, the severity of the drought has not fundamentally eased – soil moisture continues to deteriorate, placing sustained pressure on cotton during its critical growth phase. Historically, July is the boll-setting period, when water demand peaks. Drought directly affects boll development and fiber length, thereby reducing yield and quality. The market has responded swiftly: the Zhengzhou cotton futures main contract (2609) closed at 15,930 yuan per ton, with the bullish news providing clear support.
Global Cotton Supply-Demand Balance May Be Reshaped
The United States is the world's largest cotton exporter, and fluctuations in its output directly influence international cotton prices. If the current drought persists through August, the reduction in the new crop could exceed market expectations. According to industry data, the global cotton stock-to-use ratio for the 2025/2026 season is already at a relatively low level, and a poor U.S. harvest would further tighten supply. For Chinese textile enterprises, the stability of import sources and price expectations face dual uncertainties. On one hand, rising U.S. cotton prices directly increase import costs. On the other hand, if other major producers such as India or Brazil experience simultaneous weather disruptions, global cotton prices could experience a systemic upward shift.
Transmission Path Through the Textile Industry Chain
As the most upstream raw material in the textile chain, cotton price fluctuations are transmitted sequentially to yarn, fabric, and even garment manufacturing. The current price increase expectation has been partially reflected in the Zhengzhou futures market, but the spot market has not yet fully absorbed it. Spinning mills face a dilemma: purchasing at current prices would squeeze margins, while waiting could lead to even higher prices and procurement difficulties later. Weaving and dyeing operations may also slow down order placement, and downstream brands may postpone order confirmations to avoid raw material cost volatility.