In 2024, cotton producers, like many farmers, hoped to hold out for higher prices. Marketing is one of the most difficult and most important aspects of keeping a profitable farm operating.  

Longtime Peach Orchard, Mo., cotton broker Barry Bean said in years like 2024, making market decisions can be a tricky task. 

“This year, there wasn't a whole lot of forward contract work. When the market sold off, it caught a lot of people unprepared and unaware, frankly, including me,” Bean said. “When the market sold below 80, we thought it was coming back. I had a couple of customers who grabbed it while it was going down, and at the time, I thought they were making a terrible mistake, and now they look like the smartest guys in Missouri.” 

While 2024 was a unique year, markets follow particular patterns.  

“In a year like this, what will typically happen is, as long as the basis is strong for spot cotton that can be delivered quickly, then we'll continue selling small recaps into that basis and then encouraging those producers, if they are bullish on the futures, to then go out and turn that into some calls on the March or May or July market,” Bean said.  

When working with producers in good years and challenging years, Bean said he wishes growers would utilize two techniques more frequently: using options and sticking to a firm price. 

Related:Inside the role of a Cotton Broker: Beyond simple sales

Be open to options  

“I've got an awful lot of customers that are completely comfortable using options to hedge their grain,” Bean said. “They get into just some of the most outlandishly complicated grain marketing schemes that I can imagine, using options, and it works for them, and they're comfortable with that.” 

Bean said when he mentions selling cotton and buying call options in future months, that confidence often breaks down.  

“I tell them, look, why don't you sell this cotton today? Take two or three cents of that and go buy yourself a call option on the May contract,” Bean said. “And they look at me like I just suggested they go to Vegas and put their life savings on the roulette table. In fact,they're doing just the opposite. They're putting the floor under themselves.”  

Learning and using basic hedging practices would make a big difference for better cotton marketing, Bean said.  

Find a firm price  

The other practice is even simpler - find a price to fit the farm profitability goal and stick to it.  

“I do see growers spend an awful lot of time chasing 10 points on a basis, or they'll walk away from a great deal because they heard the gin down the road sold some cotton for 50 points better,” Bean said. “Nine times out of 10, there was a reason they did that.”  

Whether the buyer was trying to overcome issues or trying to alleviate warehousing woes, often chasing a penny on price doesn’t pay off for producers in the long run.  

 “By the time they figure out it wasn’t as good of a deal as they thought, they see their market slide away,” Bean said.