70 Cent Cotton Prices are Attainable

The recent rise in cotton prices is certainly welcomed after the negativity surrounding the old crop July contract has dissipated. With the December contract steadily increasing throughout the week, it now stands poised to break the 70-cent mark, with an eye on surpassing the 72-cent barrier. Achieving this milestone would open up the possibility of reaching the long-awaited 75-cent level. However, the journey to exceed 72 cents will be met with challenges due to weak demand at every step.

The future of the December ICE futures market will center around factors such as the substantial Brazilian crop, dwindling U.S. crop, and the evolving Chinese and Indian crops. An emerging demand factor to watch is the need for cotton in Central Asia and the weak Pakistani crop, indicating a potential increase in U.S. exports to Pakistan.

While these developments present opportunities for higher prices, it’s important to note that sustained price increases are contingent upon addressing consumer demand for cotton goods. Without consumer confidence in cotton products, demand will likely remain stagnant or decline. Historically, the responsibility for crop production research belonged to universities, but it has now shifted to private industry.

Looking ahead, all eyes are on the USDA’s June 30 Planted Acres report, which will provide insights into the 2025 U.S. cotton plantings. Estimates range from 8.7 to 10.2 million acres, with the potential for a crop between 13.0 and 13.5 million bales. If realized, this could push the December futures contract to 75 cents. However, unforeseen factors such as weather conditions can dramatically impact crop yields.

Recent export sales of U.S. upland cotton have been below average but in line with seasonal expectations. Countries such as Vietnam and Pakistan have played a significant role in these sales. The Cotton On Call report reveals a substantial number of unfixed call purchases on the December contract, which could impact market dynamics given the estimated size of the U.S. crop.

As the December contract vies to reach 70 cents, the market is keeping a close watch on global stock levels. However, as the northern hemisphere crop progress aligns with typical weather patterns, the bullish sentiment associated with the delayed U.S. crop may diminish. The week ahead will be crucial in determining whether the bullish momentum can be sustained in the cotton market.