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 might induce more cotton acreage in the Texas Rolling Plains and Panhandle in lieu of 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.
Meanwhile, USDA’s first comprehensive new crop balance sheet forecast worked off the March 31 acreage number 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 modestly on par with 28% of intended acreage being planted as of May 11, 2025.