Where cotton and yarn rates are headed in the second half of 2026 — and how mills should plan procurement.
Key Takeaways
- Cotton futures expected to trade in a firm-to-range-bound band on tight global stocks-to-use.
- Spinning margins recover as yarn realisations catch up with raw-cotton inflation.
- Bangladesh and Vietnam demand remains the key swing factor for Indian yarn exports.
- Recommendation: stagger procurement, lock 30–45 day cover, avoid speculative inventory.
Cotton prices entered the second half of 2026 on a firmer footing as global stocks-to-use ratios tightened and key producing regions reported weather-led yield concerns. For Indian mills, the practical takeaway is that the era of cheap raw cotton is unlikely to return in the near term, and procurement strategy must shift from opportunistic buying to disciplined forward cover.
On the yarn side, realisations have begun to catch up with raw-material inflation, repairing the spinning margins that were squeezed through 2025. Counts in the 30s–40s combed segment are seeing the healthiest demand, driven by knitwear orders out of Tirupur and Bangladesh. Open-end and coarser counts remain more price-sensitive.
Export demand is the single biggest variable. Bangladesh and Vietnam continue to pull Indian yarn, but any softening in EU/US retail sentiment flows straight back to the spinning belt within weeks. Mills with diversified buyer books and the ability to switch counts quickly will outperform.
Our recommendation for the next two quarters: stagger procurement across the season rather than chasing single-point lows, maintain a 30–45 day raw-cotton cover, and avoid building speculative inventory. Use the WTH price tracker to set alerts on the spreads that matter for your specific count mix.
