Production Surge and Growing Inventories Shape the Cotton Market Dynamics

The USDA’s July projections for the U.S. cotton market in 2024/25 indicate increases in acreage, production, and stock levels.

• U.S. cotton production for 2024/25 is projected to increase by 1 million bales to 17.0 million, with ending stocks rising to 5.3 million bales.

• Global cotton production is forecasted to rise by 1.1 million bales to 120.2 million, driven by higher output in the United States.

• The season-average upland farm price is reduced to 68 cents per pound, reflecting increased supply levels.

The U.S. cotton outlook for 2024/25 shows an increase in planted area by 1 million acres, as indicated in the June Acreage report. This leads to a 1-million-bale increase in crop production, bringing the total to 17.0 million bales. Consequently, ending stocks are projected to rise by 1.2 million bales, reaching 5.3 million bales, which represents 36 percent of use. The season-average upland farm price is forecasted to decrease by 2 cents to 68 cents per pound.

On a global scale, the 2024/25 cotton balance sheet reflects increased production and consumption, while beginning stocks and world trade are reduced. Beginning stocks are down by 1.7 million bales, with significant reductions in India. Global production is forecasted to rise by 1.1 million bales to 120.2 million, largely due to higher U.S. output. Consumption is projected to increase by 250,000 bales, with notable rises in India and Malaysia.

While U.S. domestic use and exports remain unchanged for 2024/25, revisions to the 2023/24 balance sheet include a 200,000-bale reduction in exports, resulting from a slower pace of shipments, and a corresponding increase in ending stocks. Globally, world trade is expected to decline slightly, reflecting lower beginning stocks and higher consumption.

The overall outlook for the 2024/25 cotton market indicates robust production growth and increased ending stocks. Despite a reduction in the average upland farm price, the market remains well-supplied. Global trends show increased production and consumption, leading to tighter ending stocks.

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The information provided in this market insight is for general informational purposes and should not be considered financial advice. It is not intended to offer any financial recommendations or endorsements. Any decisions made based on the content are the sole responsibility of the reader.