Cotton acres are expected to rise 4% in 2024, a number that was a bit surprising to the trade. While that increase might be reflected in the June acreage report, another key question is if cotton demand can continue to find footing and support higher prices.
USDA’s Prospective Plantings report showed cotton farmers plan to plant 10.7 million acres in 2024. That’s lower than what many expected leading into the report, according to Jody Campiche, vice president, economics & policy analysis, National Cotton Council (NCC).
“If you take a look at the trade and what they were expecting, most were expecting a higher number,” Campiche says. “We were at 10.2. million acres last year and 10.7 million this year, but I think most people in the industry were expecting somewhere in the 11 to 11.5 range.”
Campiche says the biggest question mark is with Texas acreage. USDA showed farmers intend to plant slightly fewer cotton acres in 2024.
“When you look at where the acreage is going, it doesn't show it's actually going to any other principal crops,” Campiche explains. “We're actually seeing a decline in overall primary crop acreage, but it's still early. I think we could see some changes, and maybe some additional acreage could pop up somewhere in Texas.”
Cotton Demand
Campiche says the U.S. cotton demand picture is improving, but it’s still struggling.
“As we look ahead, it's really going to depend on what happens with the U.S. crop this year and what happens in Brazil and Australia,” she says. “Brazil continues to expand their acreage and produce a better crop. Australia has water, so their crops should be good as well. All those things could create some price pressure for this next year.”
South America might be the biggest wildcard for both supply and demand, but outside of South America, the demand picture hinges on a strong economy in the U.S. and around the globe.
“We’re going to have to see where economic growth goes,” Campiche says. “Right now, current world GDP growth projections are about 3.1% for 2024. We don't generally see a large swing in cotton demand from one year to the next — a large bounce back with growth is about 3%. We're going to need to see better economic growth and better cotton demand.”
EDITOR’S TAKE:
Cotton is a pretty big deal in the states where it is grown. It is also a pretty big deal to the nation as a whole. The mixed report of potentially fewer acres than expected in the U.S., but more acreage in South America and Australia is concerning. This could be troublesome if acreages in the other nations increase substantially and demand does not keep pace. If that scenario comes to fruition, prices and incomes could be lower. But let’s be optimistic and hope for a great outcome for our domestic producers this year. Either way, cotton farmers will still purchase trucks. Be sure to let them know what you have available on AgTruckTrader.com®.
