Saturday, April 20, 2024

Charting Cotton’s Course

U.S. cotton’s economic outlook is being shaped by factors ranging from strong export competition to uncertainty in the global economy.

How is 2024 starting?

gary adams, ncc
Gary Adams, NCC

With lower commodity prices and high input costs, growers will face difficult economic decisions in 2024.

Current cotton-to-corn and cotton-to-soybean price ratios are more favorable this year, but these prices may not be high enough to cover all production expenses. Given the financial pressures across the industry, the importance of a strong safety net cannot be overstated.

What about 2024 production/offtake and prices?

The NCC acreage survey pegs 2024 U.S. cotton acreage to be 9.8 million acres, 3.7 percent less than 2023. It is important to remember that the survey was conducted from mid-December through mid-January. Since that time, cotton prices have strengthened while corn and soybean have declined. As a result, final acreage could come in above the NCC survey.

Using ten-year average abandonment rates along with a few state-level adjustments to account for current moisture conditions, Cotton Belt harvested area totals 8.1 million acres for 2024 with a U.S. abandonment rate of 17.9 percent. Based on the five-year average yield for the Southeast and the Midsouth and the 10-year average yield for the Southwest and the West generates a cotton crop of 14.6 million bales (14.0 million upland and 538,000 extra-long staple).

Regarding offtake, the NCC is projecting U.S. mills consume 1.85 million bales in the 2024 crop year as compared to 1.75 million bales in 2023. U.S. textile manufacturing remains under pressure from weaker Western Hemisphere trade due to concerns about the impacts of increased U.S. textile imports under de minimis provisions. Between August and December 2023, eight U.S. textile manufacturing facilities shutdown operation.

For the 2024 marketing year, world consumption is projected to increase by 2.6 percent to 115.3 million bales. The projected increase in world consumption along with a larger U.S. supply results in a larger U.S. export projection as compared to 2023. U.S. ending stocks are projected to increase slightly to 2.9 million bales in 2024. Although the U.S. is projected to retain its position as the top exporter, Brazil is just slightly behind the U.S. in export sales. The U.S. will continue to face very strong export competition from Brazil. Considering the current export patterns of both countries, Brazil is on track to become the largest cotton exporter in the very near future.

NCC economists see world production increasing to 115.1 million bales in 2024 due to an increase in harvested acreage. Overall, the outlook for world cotton demand for the 2024 marketing year takes on a more positive tone as the economic outlook has improved in the past month. With expanded consumption in key importing countries, world trade is projected to increase to 43.4 million bales. For the 2024 marketing year, higher world production, consumption, and trade result in a slight decline in ending stocks to 83.5 million bales.

Regardless of market developments, the NCC will continue to vigorously pursue effective farm policies/programs and trade agreements while opposing unworkable regulations to bolster U.S. cotton industry members’ competitiveness in the global marketplace.

The NCC’s 2024 Cotton Economic Outlook at http://www.cotton.org/econ/reports/annual-outlook.cfm offers more details on the global and cotton economies.


Gary Adams is president/CEO of the National Cotton Council of America.

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