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 June WASDE report included extremely bullish supply side adjustments to the U.S. new crop balance sheet.  While still working off the March 31 acreage number (9.87 million acres) the abandonment and yield assumptions were adjusted higher and lower, respectively, on the assumption of prevented planting and yield loss to a wet Delta crop. This translated into a 500,000 bale cut in U.S. all cotton production, on top of the 400,000 bale reduction in carry-in.  Hence ending stocks declined from 5.2 million to 4.3 million bales.  This is very bullish in the adjustment and the resulting lower level.  Now the year-over-year pattern of ending stocks is stable-to-decreasing, which has an historically bullish interpretation.

The pace of U.S. cotton planting is at 92% of intended acreage being planted as of June 22, 2025.   This is 3% off of the five year average pace. Mississippi is the lagging outlier at 20% off the five year average pace!   Cotton squaring is at 26% nationally, which matches the five year average pace.  As of June 22, the condition rating for the 2025 Texas crop showed an index value of 58 — middle of the pack of historical ratings for this time of year (see chart below).  The U.S. cotton condition index showed 47% “Good/Excellent” with another 33% “Fair” for the week ending June 22.

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.