Cotton Futures Prices Have Weakened Substantially Since Harvest
DR. AARON SMITH
KNOXVILLE, TENNESSEE
Nearby cotton futures prices have weakened substantially since harvest, declining from 71.93 cents on November 29 to 65.88 cents on January 31. Compared to one year ago, cotton futures have declined from 85.17 cents to 71.93 cents, a 16% decline. Five factors that have, and will continue to influence, cotton futures prices are:
- 1) Demand. Cotton demand has stagnated. In the 2010/2011 marketing year, global cotton consumption was 116 million bales. USDA, for the 2024/2025 marketing year, projects global cotton consumption at 116 million bales. In 2000/2001 global per capita cotton consumption was 7.13 lbs/person/year. In 2024/2025 per capita cotton consumption fell to 6.82 lbs/person/year. Without substantial improvements in global cotton demand prices will continue to trade below 73 cents.
- 2) Export competitiveness and a high USD. Since January 2022 the USD index has strengthened 12.1%. A higher USD decreases the competitiveness of U.S. exports to global markets. 76% of the 14.41 million bale 2024 U.S. cotton crop is projected to be exported.
- 3) Trade, tariffs, and retaliatory tariffs. This could be positive or negative for cotton prices. If trade negotiations include an increase in U.S. cotton exports to foreign markets, it will help improve prices. If cotton is targeted for retaliatory tariffs, the price impact could be substantial.
- 4) Brazil cotton production. In 2000/2001 Brazil produced 3.76 million 480 lb bales of cotton. For this marketing year Brazil is projected, by USDA, to produce 16.9 million bales, a 349% increase in 25 years. Brazil has been doubling cotton production every ten years. This expansion has limitations; however, Brazil has fundamentally changed global cotton supply and markets over the past ten years.
- 5) U.S. planted acreage. Relative to corn, soybeans, and other southern row crops, cotton prices are substantially lower than last year. Most current projections have U.S. cotton planted acreage between 10.5 and 11 million acres. Cotton planted acres will be limited to areas where there are limited alternatives (Texas) and farms across the Cotton Belt that have long term capital tied up in equipment, gins, and warehouses that can extract additional revenue from supplementary functions in the cotton supply chain.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 20 under to 25 over, with an average of 10 over the March futures at elevators and barge points. Ethanol production for the week ending January 24 was 1.015 million barrels per day, down 84,000 compared to the previous week. Ethanol stocks were 25.722 million barrels, down 0.152 million barrels compared to last week. Corn net sales reported by exporters for January 17-23 were net sales of 53.5 million bushels for the 2024/25 marketing year and 1.8 million bushels for the 2025/26 marketing year. Exports for the same period were down 13% compared to last week at 52 million bushels. Corn export sales and commitments were 70% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31) compared to the previous 5-year average of 66%. Cash prices ranged from $4.45 to $5.25 at elevators and barge points. March 2025 corn futures closed at $4.82, down 4 cents since last Friday. For the week, March 2025 corn futures traded between $4.77 and $4.97. May 2025 corn futures closed at $4.93, down 3 cents since last Friday.
Mar/May and Mar/Dec future spreads were 11 and -22 cents. December 2025 corn futures closed at $4.60, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $4.70 December 2025 Put Option costing 44 cents establishing a $4.26 futures floor.
Soybeans
Across Tennessee the average soybean basis strengthened or remained unchanged at West, Northwest, North-Central, West- Central, and Mississippi River elevators and barge points. Average basis ranged from 37 under to 35 over the March futures contract, with an average basis at the end of the week of 22 over. Soybean net weekly sales reported by exporters were net sales of 16.1 million bushels for the 2024/25 marketing year and 0.2 million bushels for the 2025/26 marketing year. Exports for the same period were down 29% compared to last week at 27.1 million bushels. Soybean export sales and commitments were 86% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31), compared to the previous 5-year average of 84%. Cash soybean prices at elevators and barge points ranged from $10.05 to $10.81. March 2025 soybean futures closed at $10.42, down 13 cents since last Friday. For the week, March 2025 soybean futures traded between $10.34 and $10.61. March soybean-to-corn price ratio was 2.19 at the end of the week. May 2025 soybean futures closed at $10.57, down 11 cents since last Friday.
Mar/May and Mar/Nov future spreads were 15 and 9 cents. November 2025 soybean futures closed at $10.51, up 3 cents since last Friday. Downside price protection could be achieved by purchasing a $10.60 November 2025 Put Option which would cost 69 cents and set a $9.91 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.28 at the end of the week.
Cotton
North Delta upland cotton spot price quotes for January 31 were 63.38 cents/lb (41-4-34) and 65.38 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.31 cents to 54.02 cents. Cotton net weekly sales reported by exporters were net sales of 280,000 bales for the 2024/25 marketing year and 38,600 bales for the 2025/26 marketing year. Exports for the same period were down 31% compared to last week at 153,500 bales. Upland cotton export sales were 85% of the USDA estimated total annual exports for the 2024/25 marketing year (August 1 to July 31), compared to the previous 5-year average of 86%. March 2025 cotton futures closed at 65.88 cents, down 1.73 cents since last Friday. For the week, March 2025 cotton futures traded between 65.7 and 68.17 cents. May 2025 cotton futures closed at 67.04 cents, down 1.63 cents since last Friday.
Mar/May and Mar/Dec cotton futures spreads were 1.16 cents and 2.83 cents. December 2025 cotton futures closed at 68.71 cents, down 0.79 cents since last Friday. Downside price protection could be obtained by purchasing a 69 cent December 2025 Put Option costing 4.22 cents establishing a 64.78 cent futures floor.
Wheat
Wheat net weekly sales reported by exporters were net sales of 16.8 million bushels for the 2024/25 marketing year and 0.9 million bushels for the 2025/26 marketing year. Exports for the same period were up 66% compared to last week at 21.6 million bushels. Wheat export sales were 79% of the USDA estimated total annual exports for the 2024/25 marketing year (June 1 to May 31), compared to the previous 5-year average of 89%. Wheat cash prices at elevators and barge points ranged from $4.96 to $5.28. March 2025 wheat futures closed at $5.59, up 15 cents since last Friday. The March wheat-to-corn price ratio was 1.16. March 2025 wheat futures traded between $5.32 and $5.69 this week. May 2025 wheat futures closed at $5.72, up 14 cents since last Friday.
Mar/May and Mar/Jul future spreads were 13 and 25 cents. July cash contracts at elevators and barge points ranged from $5.01 to $5.69. July 2025 wheat futures closed at $5.84, up 14 cents since last Friday. Downside price protection could be obtained by purchasing a $5.90 July 2025 Put Option costing 48 cents establishing a $5.42 futures floor. ∆
DR. AARON SMITH: University of Tennessee