Longer run price outcomes for the 2025 crop will depend on expectations of supply and demand. The first supply-related question is how much acreage will be planted. The price of competing crops, relative to cotton prices, is an important consideration to the level of planted acreage. The chart below shows a fairly strong relationship between the level of U.S. upland and pima cotton planted (as measured on June 30) and the ratio of December CBOT corn futures and ICE cotton futures during the first quarter of the year. The higher the ratio, the less cotton is planted. Of course, there are other important competing crops as well: sorghum, soybeans, peanuts, and perhaps wheat. And there are other non-price influences, including how dry it is in Texas, the insurance base price, fixed cost influences, and the psychological influence of the preceding growing season. But the price ratio of corn to cotton appears to capture a lot of these other influences in explaining variations in cotton plantings.
What does the above chart imply for 2025? Crop prices are during the first quarter of 2025 showed an average Dec’25 CBOT corn/Dec’25 ICE cotton ratio of 6.6. This is historically associated with between 10.0 and 10.5 million acres of all cotton. But there are two other potential influences that might lead to plantings different than that predicted by this chart. First, the negative memory of declining/low prices during the 2024 crop season may linger on growers’ minds and have more influence on their planting decision in 2025. Second, the recent rainy pattern could have mixed effects. There could be relatively higher levels of prevented planting in the Delta and Southeast region. On the other hand, a wetter Texas may see relatively lower abandonment of intended plantings, and the rains might even induce more cotton plantings in the Rolling Plains and Panhandle on failed wheat acreage.
The most current estimate of planted acreage (USDA Prospective Plantings as of March 31) is 9.87 million acres. That is sort of in-between the low level forecasted earlier by the NCC versus that suggested by relative prices (discussed above). We’ll have to see where USDA’s June 30 Planted Acreage forecast is. Figure 1 shows the variations in USDA NASS projections for March 31 to June 30 planted all cotton acreage from 1980 through 2024. Over the 45 observations, roughly half (23) showed a decrease in acreage from late March to late June, while the reverse was true the other half of the time. The average negative deviation was -5.4%, while the average positive deviation was 4.5 %. Most of the positive deviations were associated with higher December ICE cotton futures on June 30 relative to March 31 (Figure 1, green bars). Similarly, most of the negative deviations were coincidental with lower December ICE cotton futures prices over that same period. All other things being equal, the average positive and negative deviations from Prospective Plantings suggest a possible range of June 30 all cotton planted acreage from 9.3 million to 10.3 million acres.
USDA’s first comprehensive new crop balance sheet forecast is still working off the March 31 acreage number (9.87 million acres) and 1) assuming 10-year average abandonment by region, adjusting the southwestern region to account for recent rains, and 2) assuming 5-year average regional yield per harvested acre. The new crop carryover stocks outcome implied by this balance sheet is somewhat bearish, especially because it is dependent on robust export demand.
The pace of U.S. cotton planting is at 66% of intended acreage being planted as of June 1, 2025. This is 3% off of the five year average pace. Cotton squaring is at 8% nationally, which is one percentage tick above the five year average. As of June 1, the condition rating for the 2025 Texas crop showed an index value of 59 — middle of the pack of historical ratings for this time of year (see chart below).
Global new crop cotton supply and demand of cotton has similar influences as those in the U.S. For example, USDA’s May WASDE reported projected a similar level of new crop ending stocks as the prior marketing year. However, new crop production, among other variables, could be higher than currently projected, especially if India and Pakistan have above average monsoon rains.