New crop (Dec) futures have increased 1 ½ cents in the last week and a half and 2 ½ cents in the last 5 weeks. Dec is now at roughly 70 cents and attempting to match or better the highest levels since last July.
This is the recovery that growers have been waiting for. This also produces challenging decisions. Prices have been so disappointing for so long—do you take advantage of this rally on at least some (small) portion of the expected 2026 crop, or are you optimistic enough to wait, and hope price trends higher?
Why the improvement in price?
March Estimates Not Much Impact
This week’s USDA supply-demand projections for March compared to February showed:
- No Change for the 2025 crop marketing year for US production and exports
- World production was increased 1.13 million bales—highlighted by a 750K bale increase for Brazil and a ½ million bale increase for China.
- World demand was reduced slightly by a net of 140K bales—China was increased ½ million bales, but reductions for Pakistan, Mexico, Indonesia, Bangladesh, and Vietnam.
- Imports to China were unchanged.
- Brazil exports were unchanged; Australia was increased
Exports Have Been “Encouraging”
For the past 2 weeks, US export shipments have hit marketing year highs. Shipments for the most recent 2 weeks reported averaged 351,000 bales per week. Shipments need to average 314,000 bales/week for the remainder of the 2025 crop marketing year to meet USDA’s projection for the year.
China, which at one time had purchased no US cotton, has now bought approximately ½ million bales. That’s not much from a country that used to be our #1 buyer. But it’s better than zero.
Improved Optimism?
Some reports seem to suggest that lower prices generated “bottom feeders” buying. Some suggest an increase in speculative buying. Buying is buying and we need buying to pull prices up.
It appears we could now have 3 levels of “support” in this market. This can be further evidence that the market low could be in for the 2025 crop.
Acres, Production, and Drought
Make no mistake, price direction is still focused on demand, and we need demand. But US conditions are beginning to draw attention. It is estimated that 88% of the cotton area is currently in some degree of drought.
The USDA’s Prospective Plantings report comes out on March 31. It is based on surveys done in the first 2 weeks of March. So, this recent price improvement could be a factor. Estimates released thus far are that acres could be about the same or a little less than last year.
Dr. Don Shurley is professor emeritus in the Department of Agricultural and Applied Economics at the University of Georgia, Tifton.
Source: cottongrower.com