The government shutdown has paused or scaled down some, but not all, USDA functions. The October supply/demand (WASDE) report was not released, weekly exports data is not available, weekly crop progress and conditions data is not available, and weekly AWP and LDP/MLG data is not available. Thankfully, FSA has recently restarted some operations/functions.
After falling to nearly 63 cents, prices (December futures) have shown improvement over the past couple of weeks and currently stand at about 66 cents. This is likely due to 63 cents uncovering some demand at that low price. The market is also encouraged by potential progress in U.S.-China trade negotiations. The market may also have some pent-up reaction to the lack of data when such data is available again.
I’ve been asked numerous times if I think prices will improve. Farmers obviously have some tough decisions to make. Prices have been disappointing — and still are despite this more recent improvement.
Farmers need cash flow. Because prices were low and growers continued to hope for improvement, I think little of the crop has been priced for delivery at harvest time. Recent improvement fuels hope that this may be the beginning of further gains.
Can prices continue to improve? No one knows for sure, but:
- It’s possible if (1) U.S.-China trade talks are positive, and it results in cotton export sales and shipments, and (2) if the U.S. crop gets smaller when subsequent reports are available.
- It’s less likely if (1) U.S.-China trade talks disappoint, and (2) if the U.S. crop gets bigger.
It’s important to recognize that improvement is relative to where we’ve been. We’ve been below even the 70-to-71-cents level for almost a year — since December 2024. So, there’s likely a lot of headwind to fight off on the way back up.
Even 70-to-71 cents is a disappointing and worrisome price when you consider costs and what it takes to profit. New crop December 2026 futures sits below 70 cents. December 2025 futures was at about 73 cents at this time.
I’ve seen some commentary that mentions the typical seasonal low in price that happens at harvest due to increased supply and the flood of crop coming in. That doesn’t apply here. Yes, the crop is coming in, but very little of it is already priced and committed for delivery. And with prices being so low, it’s not likely that much of it is going to be priced and sold at harvest.
The problem is low demand, not too much supply. If demand were better and buyers had markets waiting on the crop, the lack of delivery commitments would likely be enough to drive price up and/or the basis improve.
It’s harvest, and I’d venture to say that most producers may have very little, if any, of the crop priced for delivery. Yet, cash flow is likely a need. Have prices finally bottomed out? Even if so, that’s not the issue. How much improvement is possible, are you willing to take the risk and defer selling until later, and what are your choices of how to do this?
There may be others, but I can think of three ways to defer until later but provide some cash flow now:
- Store the crop under Loan
- Enter a deferred price or on-call or provisional contract using a more distant futures
- Sell the crop and buy a Call Option on a more distant futures
Each of these choices has advantages and disadvantages. They’re not perfect, and you’re taking risk in an unknown future. But each will work to provide cash flow now but defer the market outcome until later. Otherwise, your only option is to sell now and be done.
That’s the zero-risk choice. But unfortunately, that’s sure not a pretty picture.
Dr. Don Shurley is professor emeritus in the Department of Agricultural and Applied Economics at the University of Georgia, Tifton.
Πηγή: cottongrower.com