By O.A. Cotton, O.A. Cleveland, Consulting Economist, Cotton Experts
March 4, 2018
Plant…Plant…Plant… Cotton prices posted another impressive week to the upside as world demand continues to expand. U.S. cotton is enjoying an enviable position.  While the supply of high grade cotton in the U.S. is limited this season (as throughout the world), the U.S. has an abundant supply of low grade cotton that is competing extremely favorably in the world market. Literally, the market U.S. low grades, the most contamination free is the world, is driving export demand higher with each passing week.

U.S. exports will increase well above the current USDA estimate of 14.5 million bales. Consequently, U.S. ending stocks will be substantially lower than the current bloated USDA estimate of 6.0 million bales. Granted, USDA estimates are an attempt to hit this season’s rapidly moving target, a target that is much more dynamic than usual. World cotton demand has simply caught forecasters off guard.

In the coming months and beginning with the March estimates, look for significant changes involving production, exports, both U.S. and world ending stocks and hopefully a clearer understanding of the Indian stocks fiasco. The market is clearly making that point.

Further, both U.S. and world carryover are expected to be as much as 2.0 million bales lower than the current USDA estimates. The world is experiencing its third consecutive drawdown in world cotton stocks. As noted in prior newsletters, both export demand and the need by textile mills to make end of season pricing decisions will not only support old crop prices at current levels, but also drive prices higher. Additionally, as world and U.S. ending stocks are lowered, the new crop December price will push toward the low 80’s, and likely higher. Thus, my leading comment Plant…Plant…Plant.  


As discussed last week export sales ready for shipment have reached a record level. Pickups appeared to improve last week and reports are that additional improvements will come week by week. Thus, U.S. exports are now set to surpass the current USDA estimate of 14.5 million bales and will likely climb to 15.5 million bales, some one million above the current USDA estimate.

Actually, it will not be surprising to see exports climb to 16 million bales. Some estimates are as much as two million bales higher than the current USDA estimate. Also, as addressed last week, shipments will continue to remain at unusually high levels into the 2018-19 winter months and into the spring of 2019 as the demand for U.S. cotton continues to build.

Chinese demand is expected to remain strong. As the 2018 domestic auctions begins to unfold it will be necessary for the Chinese Reserve Stocks sales to continue robust if the U.S. is to increase its sales to China. Certainly active sales to China will continue, but they could be slowed slightly slowed if the domestic auction moves slow. Nevertheless, demand is strong.


The U.S. will need to rebuild its production of high grade cotton as its inventory level remains abnormally low. Thus, the 2018-19 world cotton market has already established itself a as a roaring weather market. U.S. plantings will likely total 13.5-13.6 million acres. With production between 17.0 and 21.5 million bales. Excellent weather could push production higher.

However, only very good weather across all three:  India, China and the U.S. will drag prices below 70 cents futures. Thus, growers will have an excellent opportunity to price the 2018 crop in the low 80’s. That said, do not let the 79-80 cent price level pass without pricing at least 35-40% of your crop. Price more on any move above 82 cents. The normal May rains in the Southwest can totally wash these prices away. A continued drought world push prices higher. Plant and Price.