Cotton Prices Are Settling Into a Higher Range. Here's What Apparel Brands Should Do About It.
For most of 2025 and early 2026, cotton was the one line on your cost sheet you didn't have to think about. It sat quietly around 65 cents a pound while everything else — freight, labor, duty — demanded attention.
That window has closed. Cotton spiked to roughly 88 cents in February, settled back, and has spent recent months trading in a 75-to-80-cent band. The important part isn't the spike. It's the floor. The market is telling us that the cheap-cotton era is over for now, and the brands that adjust their planning early will spend the next 18 months making decisions instead of reacting to them.
Here's what's driving it, what it actually does to a knit program, and the four moves worth making before your 2027 buy is locked.
What Actually Changed in the Cotton Market
Two things moved at once — and they moved in the same direction.
Growers planted less
Cotton farmers spent two seasons on thin margins, and they responded the way any operator does: they pulled back. Global acreage came down for the 2026/27 crop year. Input costs made the decision easier — fertilizer prices climbed sharply as Persian Gulf supply was disrupted, and when your input bill jumps 30% on a crop that's barely profitable, you plant something else.
USDA now forecasts world production at roughly 117.3 million bales for 2026/27, about 4% below the prior year, with U.S. production near 13.7 million bales.
Mills started buying again
At the same time, demand quietly recovered. USDA projects world mill use at about 122.0 million bales — the second-highest level since 2017/18 and the fourth consecutive season of growth.
Do the arithmetic and you get the headline: for the first time in three years, global mill use is expected to exceed production. Ending stocks are forecast to fall roughly 6%, and the U.S. season-average farm price is projected at 73 cents per pound — the highest in three years.
There's a genuine counterweight. Warehoused stocks in China, Brazil, and the United States are still substantial, and those inventories will cap how far prices can run. This is a re-rating, not a runaway. But a floor at 75 cents is a very different planning assumption than a floor at 65.
What a Higher Cotton Floor Means for Your Cost Sheet
The instinct is to panic about fabric cost. Resist it — the math is smaller than it feels, and the second-order effects matter more.
Fiber is a slice, not the whole pie. On a mid-weight cotton tee, raw fiber is a minority of the landed cost. Knitting, dyeing, cutting, sewing, trims, embellishment, freight, and duty carry the rest. A 15-cent move in lint doesn't translate to a 20% garment increase.
But the timing effects are real. Mills quoting into a rising market shorten quote validity windows, ask for firmer commitments, and get less flexible on yarn substitutions late in development. The cost of indecision goes up even when the cost of cotton doesn't move much.
Blends behave differently. Cotton is currently more competitive against polyester than it has been in several years, which is exactly why mill demand recovered. If you run tri-blend or 50/50 programs alongside 100% cotton, your relative economics have shifted — and it's worth re-running, not assuming.
Quality gets uneven in a tight crop. When acreage contracts, staple length and micronaire consistency vary more across lots. That shows up as shade variation and hand-feel drift in finished goods, not as a line item on a quote. It's the risk that costs brands the most and gets discussed the least.
Four Moves to Make Before Your 2027 Buy
Lock yarn earlier than you think you need to. In a stable market, late yarn commitment buys you optionality. In a tightening one, it buys you exposure. Move your yarn decision upstream of your final color and quantity confirmations, and give your manufacturing partner a firm window to book against.
Re-run your blend economics from scratch. Don't carry last year's assumption forward. A 50/50 or tri-blend construction that lost to 100% cotton on cost 18 months ago may win now — or the reverse. The answer is specific to your GSM, your yarn count, and your volume, so ask for it that way.
Consolidate volume where you can. A tighter market rewards partners who can aggregate your programs into meaningful yarn bookings. If your tees and your fleece are running through two unrelated supply chains, you're bidding against yourself. Running them through one hemisphere, one partner, and one yarn commitment materially improves what you can hold.
Ask for landed cost, not FOB. Fiber is one variable among many. Duty treatment, freight, and transit reliability move together and can easily swamp a cotton move. If you're comparing quotes on FOB alone, you're comparing the wrong number.
Why Nearshore Production Changes the Math
This is the part of the conversation the market data doesn't spell out, and it's where a lot of brands are quietly winning right now.
Roughly 76% of U.S. fashion companies sourced from CAFTA-DR countries in 2026, up from 64% the year prior — the sharpest single-year jump in the region's recent history. Duty-free treatment is the reason; more than 65% of respondents named it as essential to continuing that shift. The January 2026 U.S.–Guatemala reciprocal trade agreement reinforced preferential treatment for qualifying textile and apparel products, and NCTO has been direct about the strategic logic: the Western Hemisphere supply chain is the credible alternative to Asia.
For a cotton knit program, that produces a compounding advantage. When yarns are CAFTA-DR compliant, Guatemalan production enters the U.S. duty-free — a permanent structural discount against a cotton increase that's cyclical. Add a 35-day production window instead of a 90-plus-day Asian lead time, and you get something more valuable than a cheaper quote: you get to commit later, in smaller increments, closer to real demand. In a market where fiber cost is climbing, buying less of the wrong thing is worth more than shaving pennies off the right thing.
The Bottom Line
Cotton at 75 to 80 cents isn't a crisis. It's a new baseline, and baselines reward preparation.
The brands that will handle 2027 well aren't the ones chasing the lowest quote. They're the ones who moved their yarn decisions earlier, re-tested their blend assumptions honestly, consolidated their programs with partners who can actually hold a booking, and built their costing around landed cost in a duty-free lane.
That's not a reaction to a price chart. That's a sourcing strategy — and it holds up whether cotton goes to 85 or back to 70.
MTAR has spent more than two decades helping apparel brands move from ideation to warehouse delivery, with knit production in Guatemala and Pakistan and CAFTA-DR compliant yarn programs built for duty-free entry into the U.S. If you'd like a second read on how a higher cotton floor affects your specific program — your GSM, your blend, your volume — let's have a conversation.
Frequently Asked Questions
Will higher cotton prices increase my t-shirt cost?
Some, but less than the headline suggests. Raw fiber is a minority of a knit garment's landed cost — knitting, dyeing, cut-and-sew, trims, embellishment, freight, and duty make up the rest. A meaningful move in lint typically translates to a low-single-digit percentage move in landed cost, depending on GSM and construction. The larger risk is losing flexibility on timing, not the fiber itself.
Should I switch from 100% cotton to a blend to control cost?
Only after you re-run the numbers. Cotton is currently more price-competitive against polyester than it has been in several years, which is part of why mill demand recovered. The right answer depends on your specific GSM, yarn count, and volume — and it may have flipped since the last time you checked.
How does CAFTA-DR help offset a cotton increase?
When yarns meet CAFTA-DR rules of origin, qualifying apparel produced in Guatemala and other member countries enters the United States duty-free. That's a structural cost advantage that doesn't fluctuate with the cotton market — and it's paired with shorter transit and production windows, which let brands commit closer to actual demand.
How far ahead should I book yarn for a 2027 program?
Earlier than you did last year. In a tightening market, mills shorten quote validity and get less flexible on substitutions late in development. Move the yarn decision upstream of final color and quantity confirmation so your partner can book against a firm window.