Cotton Prices: Will They Hold Up?
April 1, 2024
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NY/ICE Nearby futures in cents/lb
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2022/23
Supply Concerns
COTTON PRICES:
WILL THEY HOLD UP?
COTTON INCORPORATED’S
SUPPLY CHAIN INSIGHTS
Cotton prices were range-bound for more than a year. That range held against alternating challenges based on
concerns about lower supply and sluggish demand before breaking higher.
Supply Concerns: Small U.S. Crop
Aggressive buying from China locked up exportable
supply from U.S., Brazil, and Australia.
Purchases from China are associated with the Chinese
government’s reserve system. The reserve system sold
cotton from July to November and has been buying
imports to replenish that inventory.
Chinese Buying
Cotton Prices
U.S. production is concentrated in West Texas. This area is dry and
most cotton in the region is not irrigated.
Because cotton is drought-tolerant, it is the only major agricultural
option in West Texas. However, it needs some moisture to grow,
and the region has had several years of drought.
million bales
U.S. Export
Commitments to China
Brazilian Exports
to China
Australian Exports
to China
12.9
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19.9
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17.5
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12.1
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20
25
million bales
U.S. Cotton Production
+84% +121% +781%
Export Demand from China
Crop-Year-to-Date
Learn the reasons why cotton prices surged in recent weeks and explore the outlook for the market in
coming months.
2023/24
Supply Concerns
Demand Concerns
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Looking forward
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Falling USDA Mill-Use Estimates
The USDA releases the first official estimates for a
crop year in May. As the crop year has progressed,
forecasts for global cotton mill-use have fallen due
to slow downstream orders. It remains to be see if
downward trend has reached a bottom.
Production & Consumption
Economic & Price Outlook
Demand Concerns: Slow Buying Outside China
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World Production World Mill-Use
Export Demand Outside of China
Crop-Year-to-Date
million bales
Purchases outside of China are driven more by mill-demand, and
the steep year-over-year decreases indicate global mill purchasing
has been weak this crop year.
In the upcoming 2024/25 crop year, the USDA expects
production and mill-use to remain balanced but at slightly higher
levels than the current crop year.
-23%
-26%
-30%
INFO: MARKETINFORMATION@COTTONINC.COM LIFESTYLEMONITOR.COTTONINC.COM
Sources: Federal Reserve
1
, USDA
1
, Refinitiv
1
, USDA WAOB
2
©2024 Cotton Incorporated.
U.S. Export
Commitments outside China
Brazilian Exports
outside China
Australian Exports
outside China
Cotton supply and demand is framed in terms of crop years that reflect the seasonality of the northern hemisphere harvest and
run from August to July.
2024/25 Crop Year (begins August 2024)
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Period of most
intense harvesting
Planting decisions
made for an
upcoming crop year
Acreage decisions are made in the winter and early spring. The recent surge in cotton prices can be expected to help bring in
more acres for the upcoming 2024/25 crop year. Any additional production next crop year could calm concerns about limited
exportable supply.
Interest rates in the U.S. and other markets
are forecast to decrease in 2024, but are
expected to remain well-above the average
over the past 15 years.
Global economic growth is expected to pick
up, but hold at slower rates than lower than
those experienced ahead of the pandemic.
Both supply and demand are expected to move higher in 2024/25. Prices for delivery after the 2024/25
harvest are about 10% lower than prices for more immediate shipment.
Inflation rates have moved lower, but price
pressures remain higher than they were
before COVID.