Global cotton prices climbed in March, but the rally—driven largely by geopolitical disruptions rather than demand recovery—is adding pressure on textile producers, especially in import-dependent markets like Bangladesh.
The benchmark Cotlook A Index rose to around 81 cents per pound by the end of the month, its highest level in several months. The increase reflects external shocks rather than a structural improvement in demand, traders say. Tensions affecting shipping routes through the Strait of Hormuz pushed up oil prices and freight costs, increasing the landed cost of cotton globally, forcing cargo rerouting and tightening near-term supply availability.
For Bangladesh, the world’s largest cotton importer, the timing is critical. The country relies almost entirely on imported cotton to support its textile and garment industry. The March price surge, combined with higher freight and insurance costs, has raised raw material expenses for spinning mills. However, yarn and garment prices have not increased at the same pace, leaving mills unable to fully pass on higher costs and creating margin pressure across the supply chain.
Spinners are now balancing rising input costs with cautious buying from international brands, many of which continue to prioritize low-cost sourcing amid weak retail demand in Western markets. Global apparel demand continues to show only modest improvement, with retailers in Europe and North America still working through excess inventories while inflation affects consumer spending.
According to the United States Department of Agriculture, global cotton consumption in the 2025/26 season is expected to remain broadly flat, highlighting the absence of a strong demand rebound. As a result, Bangladeshi mills are adopting a cautious approach, purchasing cotton in smaller volumes and avoiding long-term commitments due to price uncertainty.
Also Read: Bangladesh Growth to Slow to 4.3% in FY27, IMF Flags Structural Risks
The rise in cotton prices is also strengthening competition from synthetic fibers, particularly polyester, which remains cost-competitive due to relatively stable petrochemical supply chains. For price-sensitive global apparel brands, this creates an incentive to shift toward blended fabrics with higher synthetic content, limiting cotton demand growth.
Despite March’s price increase, the broader supply outlook remains weak for cotton prices. Global production is expected to rise in the 2025/26 season, driven by higher output in major producing countries such as Brazil, India and China, while global cotton stocks are projected to increase to multi-year highs. Elevated inventory levels are likely to cap further price gains and keep the market range-bound.
The current environment is also influencing sourcing strategies. Bangladeshi mills are diversifying cotton origins, sourcing from the United States, Brazil and West Africa to manage price and supply risks. Shipping disruptions in March have highlighted the importance of logistics reliability, while a strong U.S. dollar is increasing the local currency cost of imports, further tightening margins.
The March rally highlights a broader shift in the cotton market, where prices are increasingly driven by geopolitical and macroeconomic factors rather than core supply-demand fundamentals. While short-term disruptions may continue to support prices, weak demand, rising stocks and synthetic competition are expected to limit sustained gains. For Bangladesh’s textile sector, this means operating in a volatile environment where managing cost risks and maintaining export competitiveness will be critical in the months ahead.
