Cotton prices (March 2024 futures) have made a little bounce lately and are trying to muster an upward trek. Even so, there will likely be resistance at 72 to 75 cents – still far below the cost of production.
It’s alarming to look back and consider how far cotton has fallen. We were in the 80s (but falling quickly) back in April. The downtrend continued before trying to recover starting in August. The September “rally” fell apart, and we’ve trended down again ever since.
Trying to determine what is happening is complex and difficult. Other crop markets exhibit the same pattern. So, part of whatever is impacting cotton may not be unique to cotton.
Demand is down from where it used to be. This is an industry concern. As the graph shows, use/demand has increased two years in a row. So, demand may not be the total problem. As the graphic also shows, World Use for the 2024 crop year, once projected at over 117 million bales, has been adjusted down four consecutive months to now 115.32 million bales. Demand for the 2024 crop year is down almost 2 million bales from what it was once thought to be.
Look at the next graph. This is U.S. market share. Over the years, cotton use/demand is less – the World pie has gotten smaller. The U.S. share of that pie provided by exports has declined. U.S. exports have declined from almost 40% of the World total to now 26%.
Weekly export sales and shipments have been somewhat improved recently, unfortunately perhaps due to low prices. But shipments have never been on pace to meet USDA export projections, despite these projections being adjusted/lowered monthly.
Dr. Don Shurley is professor emeritus in the Department of Agricultural and Applied Economics at the University of Georgia, Tifton.
Πηγή: cottongrower.com