It’s never too early to be thinking about next season’s marketing plan.  Prices 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?  We’ll have to wait and see where crop prices are during the first quarter of 2025.  But as of November 20, the Dec’25 CBOT corn/Dec’25 ICE cotton ratio was 6.23.  This price ratio is historically associated with between 11.0 and 12.0 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, if the U.S. slips into a La Niña drought situation during the spring, that frequently leads results in above average plantings that are then abandoned at higher rates in the Southern Plains region.  The example below assumes 20% abandonment and 800 lb/acre average yield.  It results in a reasonably healthy supply of cotton.  Making more assumptions about the possible consumption and exports, it is easy to pencil out ending stocks remaining at a price neutral level between four and five million bales.  The price outcome of that would be a similar range of Dec’25 as seen for the Dec’24 contract.

Planted (million acres)               11.5

Harvested (million acres)           9.2

Yield (lbs/acre)                           820

Production (million bales)       15.70

Carry-In (million bales)             4.30

Supply (million bales)              19.80

Domestic Use (million bales)   1.80

Exports (million bales)            13.20

Ending Stocks (million bales)  5.00