According to Palestine Today:
While the cultivation of world-famous Egyptian cotton has deteriorated because of the reluctance of farmers from planting a result of lack of revenue, and the increase of cheaper imports, an Egyptian study revealed that Tel Aviv has been seeking for decades to steal Egyptian cotton strains, and it was about to announce new types of colored cotton (taken from Egyptian strains.)The Egyptian cotton industry has been battered for decades, so it is always convenient to blame the Jews.
Meanwhile, Israel's cotton industry is doing quite well, as this fact sheet from the Israel Cotton Board shows. Israel exports cotton worldwide and is innovating in creating strains that require little water yet are high-quality.
Even if Egypt's claims are true, I have no idea if it is illegal to take a cotton seed between countries. Certainly other agricultural products are always being moved and hybridized worldwide; I'm not sure why cotton would be any different. (And were there any cotton fields in the Sinai in 1967?)
Based on what I am reading, though, Israel doesn't need any help in its cotton research and innovations.