Variability in cotton pricing and in industry-wide problems remained low over the course of 2023 and into 2024. Largely the same issues plaguing the industry soldier on, while competitors in the global marketplace are anything but stagnant.

During the 2024 Mid-South Farm and Gin Show, National Cotton Council chairman Joe Nicosia covered the current state of the cotton market, as well as some concerning cues for the industry’s future.

“World projections, like pretty much everything when it comes to cotton, have been overly optimistic,” Nicosia said. “When we take a look at world production, if we look back over the last five years, we can see where the world estimates were in May of every single year. And every single year, we've disappointed.”

In 2023, cotton production estimates placed the U.S. around 16.5 million bales, with 2024 projecting just 12.4 million.

“Another very disappointing year for production in the United States,” Nicosia said. “But when it comes to consumption, it's not doing very much better.”

Root of the issue

While outside factor surely play a role in any commodity, demand is always a primary price driver.

“We cannot get world consumption of cotton. It is part of our Achilles heel of what we have to have to compete against manmade fibers,” Nicosia said.

Even trends from true-blue American consumers show cotton slowly sinking in market share, without a rebound on the horizon. Likewise Chinese consumption has stalled with textile markets slowly diversifying to include high rates of manmade fiber.

“This is trouble for us. And when we look at it, how do we increase consumption, it's not going to be by price. Because the cotton-polyester price ratio still substantially benefits polyester,” Nicosia said. “So, what happens to cotton? Where do we go from here? Well, we’ve got to compete. And if we don't compete, we will get beat, not just on the production side. But on the consuming side too.”

Educating consumers on the benefits of cotton versus manmade fibers will be critical moving forward, as well as paying close attention to sustainability and traceability. The end goal would be a consumer base who loves cotton as much as cotton farmers love cotton.

“Bottom line, like it or not, the world just doesn't have the same love that we have for our fiber today,” he said.

New era for cotton

“We've entered a new era here in the United States,” Nicosia said. “2023 is really the beginning and I hope not the end of maybe a war that we entered and I just hope we haven't already lost before we even begun to fight. And that's because we're entering a fight for dominance, and or maybe for our survival.”

Brazil has been a concerning competitor for U.S. cotton for many years, with national production expanding from around 6 million bales in 2005 to a projection of over 15 million bales next year. While Brazil’s mastery of cotton acreage is no secret, a new competitor has quickly jumped on the same quickly expanding trendline.

“Australia is going to have the ability to grow 5 to 6 million bales when they have water available And today, they have it,” Nicosia said. “When we look at Australia and Brazil in 2016 to where we are today, the combined production that they had went from 10 million bales to 19 and a half million bales.”

As cotton demand dwindles, global growth in any portion of the cotton sector could begin to edge out U.S. market share. Eventually end users will face a choice of cotton origin, a choice the U.S. will need to claim.

“In the last seven years, the United States, Australia and Brazil, have never all had large crops together,” Nicosia said. “Australia had two devastating droughts just as devastating as we had in West Texas for the last two years. Brazil has had two years where their crops weren't all that great either. But if we ever all three have a top crop, this is what's coming - A price war.”

Nicosia said in the battle for a quality cut of global cotton demand, there are four ways the U.S. could emerge on top.

4 ways to win

1.       Consumption Increase

2.       Weaker U.S. Dollar

3.       Positive U.S. Weather

4.       Price War

Winning is important, not just for a point of pride, but also to provide outlets for U.S. cotton and secure the future of the domestic cotton industry.

“It's important because we're not going to be dry in West Texas forever. We will grow a crop again,” Nicosia said. “When we do that we need homes. We need export outlets for this cotton. We've got to be able to build our infrastructure. Our industry is not built to survive on 12 to 15 million bales a year.”

Improvements made in just one sector won’t completely change the industry’s outcome. Nicosia said, the entire industry will need to evolve.

“Cotton shippers can't do it. The producer can't do it. Our warehouse system can't do it. Our gin system can't live on that. It just can't. It's not enough revenue, it's not enough economic activity,” Nicosia said. “We have to have an outlet to be able to handle bigger productions, if we're going to survive.”