Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: United States

Cotton outlook remains friendly

TAGS: Cotton
cotton crop field
Lower production, strong demand continue to pave way for higher prices.

Cotton futures continue to excel upward in a rally that began back in April, with still no sign of a top.

Front month March futures prices are near 85 cents per pound, up from 52 cents per pound back in March.

U.S. cotton demand remains strong, while supplies of cotton have been reduced due to a combination of less production and strong export demand. The result is that ending stocks are nearly cut in half from year ago levels.

On the recent USDA report, the USDA provided little major new market announcements. U.S. cotton 2020/21 production levels were kept the same as the month prior, coming in at 14.95 million bales. Demand for exports was improved by 250,000 bales to 15.50 million bales. There was also an overall reduction in ending stocks, now pegged at 4.3 million bales, down from 4.60 in January. (Compare that to ending stocks from just two years ago, when they were up at a staggering 7.25 million bushels!)

Global carryout levels were also reduced, now coming in at 95.74 million bales, down from 96.32 the month prior.

Thanks to a lower U.S. Dollar, and strong overseas demand, the outlook for cotton remains friendly. As the world slowly begins to spin again as COVID-19 vaccines are administered globally, the desire to step back out with new clothes ahead of the summer fashion season is helping demand. Textile and clothing factories are back up and running with many retailers likely trying to peg potential pent up consumer demand for merchandise.

In addition, cotton futures have been furiously rallying in an effort to buy acres, facing competition from high priced soybeans. U.S. planted cotton acres have already been trending lower over the past few years. In the 2018/19 season, 14.10 million acres were planted in the United States. In 2019/20, there were 13.74 million acres planted. And during the 2020/21 season, 12.09 million acres were planted. Current industry chatter is pegging 2021/22 U.S. planted acres to be lower yet again, near 11.5 million acres, with nearly every U.S. producing state likely to see slight reductions in cotton acres. I’m very curious to see what the USDA will say about the matter at next week’s USDA Outlook forum, when they throw out their initial guestimates for U.S. spring planted acres for grains and row crops.

The bottom line, with no sign of a top, cotton futures look poised to continue a slow grind higher in the weeks ahead.

Reach Naomi Blohm: 800-334-9779 Twitter: @naomiblohm   and
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.