Author: John Robinson

From October 1, 2025, to November 12, 2025, the U.S. federal government was largely shut down until a congressional stalemate was resolved involving appropriations legislation. The 43-day duration of this shutdown was unprecedented, but some of its effects are taking even longer to resolve.

The agricultural marketing implications of the federal shutdown included the suspension of important public agricultural data, especially near term (i.e., weekly) data.  Such data are important for characterizing near term influences on cotton prices.  For example, the USDA Foreign Agricultural Service (FAS) publishes a weekly export sales report for cotton (and other row crops) which serves as a useful indicator of export demand.  As displayed in Figure 1, cotton weekly export sales in relation to nearby ICE cotton futures are helpful in explaining or predicting export quantities demanded.  

USDA FAS weekly export sales reports resumed on November 13, but export data picked up where it left off (i.e., for September 18).  Even with issuing semi-weekly reports to catch up, the normal one-week lag schedule won’t be achieved until January 8, 2026.  The one-week lag schedule has the most value as a current demand indicator.  But instead of a 43-day delay, we are really dealing with a 112-day delay (September 18 to January 8) until a full return to normal reporting.  Thus for over a hundred days, the only market participants with knowledge of the current export demand picture were the merchandizers.

 For another example, the Commodity Futures Trading Commission (CFTC) publishes weekly “Commitment of Traders” (COT) data on the positions of index funds and hedge funds in agricultural futures markets (Figure 2).  The changes in these speculative futures positions have near term value in explaining fluctuations in ICE cotton futures.  Like the cotton export sales data, the COT data have little explanatory power outside of a week old.

The 2025 Commitment of Traders (COT) report schedule saw significant revisions due to the federal funding lapse, leading to catch-up publications throughout the end of 2025.  Reports for late October and November 2025 were pushed to December 2025, with the CFTC increasing frequency until a return to the normal reporting schedule on December 29, 2025.  Beyond the direct shutdown (7 to 8 weeks) the CFTC near term publication schedule won’t be fully restored until after a 17-week period.

Thus, the disruption of valuable near-term cotton marketing data flow has been quite long, but as we enter the new year, we are finally back to a normal reporting period.

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Robinson, John. “An End to the Disruption of Two Key Weekly Federal Crop Reports.” Southern Ag Today 5(53.3). December 31, 2025. Permalink

Longer run price outcomes for the 2026 crop will be influenced by expectations of supply and demand.  A major supply-related question is how much 2026 acreage will be planted to cotton.  The price of competing crops, relative to cotton prices, is an important consideration to the level of planted cotton acreage. Figure 1 shows a fairly strong relationship between the level of U.S. upland and pima cotton planted (as measured on June 30) and the ratio of December CBOT corn futures and ICE cotton futures during the first quarter of the year.  The higher the ratio, the less cotton is planted. 

Of course, there are other important competing crops as well, e.g., sorghum, soybeans, and peanuts.  There are non-price influences, including how dry it is in Texas, the insurance base price, fixed cost influences, and the psychological influence of the preceding growing season.  But the price ratio of corn to cotton appears to capture a lot of these other influences in explaining variations in cotton plantings.

What does Figure 1 imply for 2026?  As of early August, the Dec’26 CBOT corn/Dec’26 ICE cotton price ratio is roughly 6.5 (i.e., $4.50 corn divided by 69-cent cotton).   Assuming this ratio prevails during Q1 of 2026, it is historically associated with between 10.0 and 10.5 million acres of all cotton.

Assuming 10.0 million acres of all cotton in 2026, and further assuming ten-year Olympic averages of U.S. all cotton abandonment (21%) and yield (869 lbs) per harvested acre, the result is a healthy crop of 14.3 million bales. This combines with NASS’s August 12, 2025 projection of 3.6 million bales of carry-in for a 17.9 million bale supply. Further assuming 14.2 million bales of total use, the result is under four million bales of ending stocks of U.S. cotton in 2026/27.  That outcome is neutral for prices as it represents static year-over-year ending stocks. 

Caveats.  Obviously, the analysis above depends on price ratios which may change between now and early 2026.  Furthermore, the price ratio approach to forecasting planted acreage will be replaced by grower survey results, beginning at the Beltwide Conference (January 7) and continuing with the National Cotton Council’s survey release (February 9) and United States Department of Agriculture’s Prospective Plantings report (March 31) and Acreage report (June 30).

The National Oceanic and Atmospheric Administration’s Climate Prediction Center forecasts equal chances for continuing ENSO-neutral conditions or the development of La Niña conditions during the winter.  The latter would imply more dryness and higher abandonment during 2026. 

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Robinson, John. “Next Year’s Cotton Market Possibilities.” Southern Ag Today 5(34.3). August 20, 2025. Permalink

The 2025 trade war between the U.S. and China has been an evolving phenomenon.  The U.S. implemented tariffs on Chinese imports effective February 4, which were then increased March 4.  China responded with a variety of tariffs, including 15% additional tariffs on U.S. raw cotton, effective March 10.  

The above situation continued to change, with the U.S. and China effectively embargoing their mutual trade in April with extreme tariff levels and then adjusting these extreme levels lower in May.  As of May 12, and for 90 days, the Chinese tariff rate on U.S. cotton is 10%.

With all the policy variation, the direct impact on U.S. cotton has probably been lower in the current 24/25 marketing year than it would have been in previous years.  The reason is that 2024/25 has seen an historically low level of U.S. export commitments to China of upland cotton (Figure 1). Thus, there is relatively little volume of U.S. cotton to be directly impacted by the initial, extreme, or current levels of Chinese tariffs.

The remaining tariff risk to cotton demand is more likely an indirect influence.  To the extent that tariffs imposed by the U.S. and its trading partners depress GDP, it follows that demand for semi-durable discretionary textile products could be reduced.  This possibility is suggested in Figure 2, where the percentage change in world GDP appears to move directly with annual per capita cotton consumption.

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Robinson, John. “Scope of Chinese Retaliatory Tariffs on U.S. Cotton Exports.” Southern Ag Today 5(21.3). May 21, 2025. Permalink

The February WASDE included an updated U.S. cotton balance sheet for 2024/25 (third column of numbers in the table below), with very minor month-over-month adjustments.  The supply side variables were unchanged from January, as were projected U.S. exports.  U.S. domestic use was cut 100,000 bales, which went straight to the bottom line of 100,000 additional ending stocks compared to last month.  This leaves U.S. ending stocks at a more bearish 4.9 million bales.

It is not surprising that the USDA left U.S. production unchanged from their January forecast.  As the ginning season winds down, cotton has two reliable measures to forecast production:  1) a count of actual physical bales (“running bales”) that are classed for fiber quality, and 2) a survey of running bales ginned.  Actual physical bales vary in weight but are around 500 pounds.  On the other hand, USDA-NASS cotton production forecasts and WASDE numbers are expressed in 480 pound “statistical bales.”  For conversion purposes, I assume a conversion factor of 1.02755 statistical bales for one running bale.

For the week ending February 6, USDA-AMS classing accounted for 13,855,096 running bales classed (or 14,236,804 statistical bales, about 99% of USDA-NASS’s production forecast). As of February 1, USDA-NASS also forecasted 13,961,700 running bales ginned (or 14,346,345 statistical bales, within about 60,000 bales of USDA-NASS’s production forecast).  So, the end of the 2024 crop processing is in sight, if not here, although they may sit on it until the final classing and ginning reports (typically in May). I don’t think there are any market changing surprises left on the production side that would affect prices moving forward.

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Robinson, John. “Late Season Indicators for 2024/25 U.S. Cotton Production.” Southern Ag Today 5(9.3). February 26, 2025. Permalink

Statistically generated near-term price forecasts are useful to compare/contrast with Extension ad hoc price estimates, USDA monthly price estimates, and trade price estimates.  Ongoing cotton price forecasting research at Texas A&M University provides some timely short-term (monthly average) price forecasts that shed light on the 2024 season.

As depicted in Figure 1, over the period January 2014 to August 2024, ICE No.2 cotton monthly average futures prices ranged from 53.75 cents per pound to 146.17 cents per pound, averaging 78.23 cents per pound. The first nine years of this data were used as the training sample for model construction, while the 2024 monthly average prices were used for out-of-sample forecasting using a structural econometric model described in the next paragraph.  

Structural econometric models consider the direct effects of specific variables on our dependent variable of interest:  ICE No. 2 cotton futures prices.  Our best working model specifies monthly average nearby ICE cotton futures as being explained by the monthly stocks-to-use ratio, real disposable personal income, real retail clothing sales, real personal consumption expenditures, the Michigan consumer sentiment index, seasonality indicator variables, and various qualitative factors.  We hypothesize that ICE NO.2 cotton futures prices are positively related to real retail clothing sales, real disposable personal income, real personal consumption expenditures, and the Michigan sentiment index but negatively related to the stocks-to-use ratio.  After estimating the model coefficients, the signs and magnitudes of the continuous variables in the model conform to prior expectations. This model accounts for roughly 96 percent of the variables in monthly average nearby ICE No.2 cotton futures prices.  The results indicate the absence of autocorrelation in the residuals.

Using our econometric model to forecast prices, on average over the out-of-sample period January 2024 to August 2024, the price forecasts deviated from the actual values by 7.75 cents per month (also known as the Mean Absolute Error), or roughly 9.7 percent (also known as Mean Absolute Percent Error). In other words, the out-of-sample ex post forecasts are, on average, higher than the actual monthly average nearby ICE cotton futures price.  This result continues with the most recent model forecasts:

• September 2024 Forecast: 76.87 cents per pound (Actual:  70.68 cents per pound)
• October 2024 Forecast: 78.66 cents per pound (Actual: 71.65 cents per pound) 
• November 2024 Forecast: 77.60 cents per pound (Actual: 70.03 cents per pound).

So, what does this mean?   The results of an otherwise well-fitting statistical model suggest what cotton growers already knew:  2024 was an abnormal year.   The nearly thirty-cent decline in monthly average nearby prices between March and August was a statistical anomaly that our model cannot predict.  

These kinds of things suggest there are atypical factors affecting price forecasts, which means adjustments need to be made by considering market forces that are not captured by economic modeling.  

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Robinson, John. “A Statistically Lousy Year for Cotton Prices.” Southern Ag Today 4(50.3). December 11, 2024. Permalink