Australian Cotton Season Nears Completion as Export Demand Slows

Ginning reaches 95% completion while softer overseas demand and market uncertainty weigh on cotton exports

The 2026 Australian cotton season is approaching completion from a ginning and classing perspective. Based on an estimated 4.5 million bale crop, ginning is approximately 95% complete and classing around 85% complete, while fewer than 20 gins remain operational compared with a peak of 38.

While crop quality has remained strong, Australian cotton exports showed signs of slowing in July. Softer demand, full warehouses, volatile futures markets and uncertainty around key destinations are creating challenges for merchants as the remaining crop moves into the market.

Ginning and Classing Progress

Several gins are expected to complete operations within the next two weeks, while others are scheduled to continue through November.

Crop quality has remained predominantly strong, with just under 90% of the crop grading Strict Middling (21) colour and better. Some lower grades, including Middling (31) and Strict Low Middling (41), were classed in August, although only in relatively small volumes.

Length, strength and micronaire have continued to record strong results, particularly for buyers seeking micronaire towards the higher end of the range.

July Exports Show Signs of Slowing

Although ginning and classing have progressed steadily, export activity slowed in July. Australia shipped just over 560,000 bales during the month, roughly in line with June.

The pace has resulted in a flatter 2026 export curve compared with the previous two years, when exports accelerated through July and August.

By the end of July 2026, 33% of the crop had been shipped. This compares with 35% in 2024 and 30% in 2025 at the same point in their respective seasons.

The slower pace has been partly attributed to the smaller crop and the relatively strong June export figure. The trade is also reporting softer demand, while warehouses across the country are reportedly full as merchants face difficulties securing new sales of the current high-quality crop.

China Remains Largely Out of the Market

The rally in ICE futures has also affected the market environment. China, traditionally an important destination for Australian cotton, has remained largely out of the market while focusing on domestic stocks.

The situation has left the trade uncertain about where the balance of the 2026 crop will ultimately be sold. Volatile markets, northern hemisphere crop conditions and geopolitical developments are contributing to this uncertainty.

India Demand Increases After Duty Removal

Exports to India increased during July following the removal of the 11% import duty, with the upward trend expected to continue into August.

Outside India, however, demand has remained subdued. Market participants are closely watching developments in futures prices and global demand as they assess the outlook for the remaining Australian cotton crop.

A correction in futures prices is expected to encourage buyers to return to the market, potentially supporting demand and helping maintain the movement of Australian cotton into export markets.