Brazil's 2025/26 cotton harvest is falling well behind schedule. According to the latest data from Conab, as of July 24, the harvest progress stood at only 16.5%, up modestly from 12.8% the previous week, but far below last year's 21.7% and the five-year average of 25%. The current pace is more than eight percentage points behind the average, marking one of the slowest starts in recent years.
Field reports from Mato Grosso, Brazil's top cotton-producing state accounting for roughly two-thirds of national output, point to persistent rainfall as the main culprit. The harvest window in this region runs from July through September. If wet weather continues, it will not only slow fieldwork but also raise the risk of fiber quality deterioration, including mildew and color degradation in already-opened bolls.
Short-Term Impact of the Harvest Delay
The most immediate consequence of the lagging harvest is a delayed arrival of new-crop Brazilian cotton onto the global market. In a normal year, Brazilian cotton begins flowing into export channels by late July. This year, that timeline is likely pushed back to mid-August or later. For spinning mills in China, Vietnam, and Bangladesh that rely on Brazilian cotton to replenish inventories, this means a tighter procurement window in the third quarter and a growing perception of near-term supply tightness.
Moreover, the delay compresses the gap between the Brazilian and U.S. new-crop arrivals. In previous years, the concentrated arrival of Brazilian cotton typically put downward pressure on international prices. This year, the delayed Brazilian supply will overlap with the peak arrival of the 2026/27 U.S. crop, potentially intensifying competition in the fourth quarter rather than simply depressing prices.
Deeper Implications for Price Floors
The market had widely expected a large Brazilian crop in 2025/26 to keep a lid on international cotton prices. However, the harvest delay is disrupting this linear logic. On one hand, the supply shift means the spot market will lack an important supply source in Q3, lending support to near-term ICE futures. On the other hand, if rain continues to impair quality, the premium for high-grade cotton could widen.
From a buyer's perspective, the Cotlook A Index has already rebounded about 3% from its June low, and Brazilian cotton basis levels are also strengthening. This signals that the price-suppressing effect of a South American bumper crop may be less pronounced this year. Spinners should reconsider their Q3 procurement strategies—the traditional approach of waiting for large volumes of Brazilian cotton to arrive before placing orders may not work this season.
Supply Chain Ripples and Regional Responses
The impact of the harvest delay is traveling upstream. Stocks of Brazilian cotton at major Chinese import ports such as Qingdao and Zhangjiagang are already low, and some traders are raising forward quotes. Weaving mills in textile clusters like Shengze and Nantong report an uptick in inquiries for Brazilian cotton, but actual transactions remain limited due to a wide price gap between buyers and sellers.
At the same time, U.S. cotton export sales have been improving recently, as some buyers shift orders from Brazilian to U.S. cotton. However, the U.S. new crop already carries a significant weather premium, and the drought situation in Texas has not fundamentally eased, limiting the substitution effect.