2023/24 Fundamentals, Outlook, and Caveats

For planning purposes, it’s never too early to be thinking about next season’s opportunities and risks. To begin with, the (still uncertain) size of the 2022 crop will influence the supply of next year’s balance sheet in the form of carry-in stocks.

Then there is the question of 2023 production.  If you take Dec’23 corn futures a little under $7 per bushel and Dec’23 cotton a little over 80 cents per pound, the result is an historically low ratio of corn futures prices to cotton futures prices (Figure 1, x-axis).  History suggests that when pre-plant corn futures prices are this high in relation to cotton futures (presently a ratio above 8), we could expect cotton planted acres under ten million acres, all other things being equal (see the graph below).  There are other influences of course, including how dry it is in Texas, and how high the insurance price is.  But there is some basis for expecting a relatively smaller plantings of U.S. cotton.

As always during volatile weather markets, the early milestone supply and demand reports will be important to anticipate and plan around.  These include:  1) headliner planted acreage forecasts around the Beltwide Cotton Conference (early January), 2) National Cotton Council’s planting intentions survey, released in February, 3) early USDA forecasts at their February Agricultural Outlook Forum, and 4) USDA”s Prospective Plantings report on March 31.



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