USDA Adds Insurance and Quota Levers to the Cotton Plan as ICE Cotton Holds Near 80 Cents
USDA's second phase of the Great American Cotton Plan expands 2027 crop-insurance endorsements and moves the cotton tariff-rate quota process to FAS, while ICE cotton trades around 80 cents a pound after USDA lifted 2026/27 world ending stocks to 70.68m bales.
USDA used a visit to a Texas farm on 16 October to add two measures to the Great American Cotton Plan launched in May. The Risk Management Agency will let producers, including cotton growers, buy multiple endorsements on a single crop insurance policy for the 2027 crop year, with final details due to approved insurance providers and agents by 30 November 2026. Separately, the Foreign Agricultural Service is designing a mechanism for 2027 that will verify purchases of US cotton by Bangladesh, Indonesia, Cambodia and Malaysia in exchange for preferential tariff treatment on apparel made with US cotton and textile inputs.
The policy support arrives into a soft market. USDA's October supply and demand report put 2026/27 world cotton exports at 44.71m bales, up 490,000 from September, and world ending stocks at 70.68m bales, up 820,000 on the month. US production was raised about 2% to 13.44m bales and US ending stocks about 6% to 3.8m bales. ICE cotton futures were quoted around 80.38 cents a pound on 12 October after opening at 80.58, with the 9 October session closing at 80.57 cents, up 0.69%.
Demand signals remain the weak leg. US upland cotton net sales for the 2026/27 marketing year were 37,400 tonnes in the week ended 1 October, down 19% on the week, with Vietnam at 14,000 tonnes and Pakistan at 10,400 tonnes; 2025/26 shipments were 36,600 tonnes, up 8%. In China, Xinjiang is in the middle of concentrated harvesting, ginners are buying cautiously and machine-picked seed cotton is quoted around CNY 7.35-7.6 per kilogram with hand-picked at CNY 8.2-8.4. Mills describe the post-holiday order book as below expectations, with yarn inventories building and downstream movement slow.
The combination leaves the fibre range-bound. New-crop supply pressure caps rallies while seed-cotton costs and the prospect of a below-expected Chinese crop put a floor under prices. USDA's measures are aimed at the trade and risk-management side of that equation rather than at price directly: crop insurance endorsements lower the cost of carrying risk into 2027, and tying tariff-rate quota preferences to verified US cotton purchases is designed to rebuild export volumes at a time when weekly sales are running below last season's pace.