*This is the second article in our 2025 Southwest Economic Outlook series. Oklahoma State University and OSU Extension Service, and Texas A&M University and TAMU AgriLife Extension Service economists weigh in on the 2025 outlook. The digital Southwest edition will be available online Friday, Jan. 7.

Cotton can be a fickle crop, and for many cotton producers in Oklahoma and Texas, the 2024 season was another rollercoaster ride. A crop filled with so much hope and promise withered as the season wore on due to the late-season hot and dry weather. However, cotton producers are eternal optimists, and it is not too early to be thinking about plans for the 2025 cotton crop. 

In the November USDA report, 2024 upland cotton production in the Southwest region (Texas, Oklahoma, and Kansas) was forecast at 4.88 million bales, up 59% from the 2023 crop that was greatly reduced from drought. The 2024 season’s abandonment was projected at 37% and may likely be raised due to late-season drought conditions across the region. For many producers, an outstanding crop was only a good rain or two away. And once again, adjusters assisted in determining whether to zero out fields.  

National outlook

On the national level, all cotton production was forecast at 14.19 million 480-pound bales, up 18% from 2023. The 2024 season’s harvested acreage was higher, but yields are projected to be lower. Cotton demand for 2024/25 is projected to be 13.1 million bales, one-half million bales less than last year’s estimate of 13.6 million bales. U.S. cotton exports continue to account for most of the demand, with mill use accounting for the remainder (Figure 1). Mill use has declined steadily over the past 25 years, and if realized, the projected 1.8 million bales for 2024/25 will be the lowest since at least 1960. Cotton exports have been quite variable over the years. With lower import demand year over year around the world, especially in China, demand for U.S.-grown cotton will be challenged in the upcoming marketing year.   

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Finally, U.S. ending stocks were projected to be 4.3 million bales, 1.15 million bales greater than 2023, but similar with the previous 10-year average. Based on global cotton supply and demand estimates and recent prices, the USDA forecast for the 2024/25 average U.S. farm price is 66 cents per pound, compared with the final 2023/24 price of 76.1 cents per pound. Nobody in cotton country is celebrating lower prices as many producers are struggling to cover production costs at these price levels. If one can find any silver lining, lower prices may stimulate demand and make cotton more competitive with synthetic fibers.    

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Marketing goals

We witnessed considerable volatility in the crop markets, and 2025 will be no different. Set marketing goals based on your production costs so that you can execute the plan when the market offers a pricing opportunity. When market opportunities present themselves, producers are encouraged to move quickly to take advantage of them. Since U.S. producers need futures prices to be 75 cents or higher to be profitable, growers are encouraged to move quickly to take advantage of price opportunities as they occur especially if cotton futures enter the 75-cent realm once again.