Cotton’s strongest price recovery in more than two years is creating a rare opportunity for African exporters, though the continent risks missing out unless it moves beyond raw fiber exports into textile manufacturing, according to a new report by Afreximbank Research.
Front-month cotton futures have climbed about 35% from their February low to around 80.5 U.S. cents a pound, ending a prolonged downturn that began in 2023. The rally has been fueled by tightening global supplies, stronger textile demand across Asia, weather-related production risks in major producing countries, and higher energy prices that have eroded the cost advantage of petroleum-based synthetic fibers.
Global cotton production is projected to decline to 116 million bales in the 2026/27 season from 122.7 million bales a year earlier, while mill consumption is expected to rise to about 122 million bales, leaving demand above supply. That imbalance is forecast to reduce global inventories to their lowest level since the 2018/19 season and push the stocks-to-use ratio down to 58.4% from 63.8% in the previous season, providing structural support for prices.
China remains the biggest driver of demand, accounting for more than one-third of global mill consumption. The U.S. Department of Agriculture forecasts China’s cotton mill use will rise to 41.5 million bales in the 2026/27 season, the highest since 2010/11, supported by government policies aimed at boosting domestic consumption, replenishing textile inventories and expanding manufacturing capacity in Xinjiang.
The report also links cotton’s recovery to turmoil in energy markets. Geopolitical tensions around the Strait of Hormuz have pushed up crude oil and naphtha prices, raising production costs for polyester and other synthetic fibers, cotton’s main competitors. While unlikely to reverse the long-term shift toward synthetic materials, the higher costs have improved cotton’s competitiveness this year.
For Africa, the improved market comes with significant challenges.
Production has stagnated or declined in several major producing countries including Chad, Cameroon and Mali because of adverse weather, rising input costs and weak productivity. Combined output from the three countries is estimated at about 1.3 million bales this season, down from 1.9 million bales in 2021/22. At the same time, Brazil has overtaken the U.S. as the world’s largest cotton exporter, intensifying competition for Asian buyers through large-scale production and more efficient logistics.
Afreximbank argues that Africa’s long-term competitiveness will depend less on exporting raw cotton and more on processing it into higher-value textile and apparel products.
The lender is backing dedicated cotton-processing special economic zones in Cameroon, Chad and Mali, while supporting similar initiatives in Kenya, Rwanda and Nigeria. In Nigeria alone, the bank has committed up to $2 billion to help transform the cotton and textile industry.
The bank cited Benin’s Glo-Djigbé Industrial Zone as evidence of the economic gains from local processing, estimating that cotton previously earning about $40 million as raw fiber exports could generate as much as $800 million when converted into finished garments. Replicating that model across Africa would strengthen industrialization, expand exports and increase intra-African trade under the African Continental Free Trade Area, it said.
Looking ahead, Afreximbank expects cotton prices to remain supported through the rest of 2026 as long as weather-related production risks persist and global economic growth remains resilient. However, it warned that weaker consumer spending, easing geopolitical tensions that lower energy prices, stronger harvests in the U.S. or Brazil, or a renewed shift toward synthetic fibers could curb the rally.
