{"id":3226,"date":"2023-11-29T11:16:51","date_gmt":"2023-11-29T17:16:51","guid":{"rendered":"https:\/\/agrilife.org\/agecon\/?p=3226"},"modified":"2023-11-29T11:16:51","modified_gmt":"2023-11-29T17:16:51","slug":"high-plains-ag-week-11-29-2023-cotton-market-update","status":"publish","type":"post","link":"https:\/\/agrilife.org\/agecon\/high-plains-ag-week-11-29-2023-cotton-market-update\/","title":{"rendered":"High Plains Ag Week 11\/29\/2023 \u2013 Cotton Market Update"},"content":{"rendered":"<div id=\"attachment_3235\" style=\"width: 253px\" class=\"wp-caption alignleft\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-3235\" class=\" wp-image-3235\" src=\"https:\/\/agrilife.org\/agecon\/files\/2023\/11\/20211020_Cotton_Harvest_LM_0345-5000x3382.jpg\" alt=\"\" width=\"243\" height=\"164\" srcset=\"https:\/\/agrilife.org\/agecon\/files\/2023\/11\/20211020_Cotton_Harvest_LM_0345-5000x3382.jpg 5000w, https:\/\/agrilife.org\/agecon\/files\/2023\/11\/20211020_Cotton_Harvest_LM_0345-1024x693.jpg 1024w, https:\/\/agrilife.org\/agecon\/files\/2023\/11\/20211020_Cotton_Harvest_LM_0345-768x519.jpg 768w, https:\/\/agrilife.org\/agecon\/files\/2023\/11\/20211020_Cotton_Harvest_LM_0345-1536x1039.jpg 1536w, https:\/\/agrilife.org\/agecon\/files\/2023\/11\/20211020_Cotton_Harvest_LM_0345-2048x1385.jpg 2048w\" sizes=\"auto, (max-width: 243px) 100vw, 243px\" \/><p id=\"caption-attachment-3235\" class=\"wp-caption-text\">(Laura McKenzie\/Texas A&amp;M AgriLife Marketing and Communications)<\/p><\/div>\n<p><span style=\"color: #000000;\">As we come to the end of the year, what do the fundamentals for the cotton market look like?\u00a0 In this post, we look at how cotton prices have moved in 2023, the current supply and demand outlook for the 2023\/24 crop, and the macroeconomic picture heading into the new year.<\/span><\/p>\n<h3><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><!--more--><\/p>\n<h3><span style=\"color: #000000;\"><strong>Cotton Prices in 2023<\/strong><\/span><\/h3>\n<p><span style=\"color: #000000;\">Figure 1 shows changes in the price of the ICE December \u201923 contract since January 1, 2022.\u00a0 After a year marked by large up and down price movements in 2022, the December \u201923 contract settled into a range-bound trading pattern for most of 2023.\u00a0 The contract price traded between $0.80\/lb. and $0.85\/lb. in the year&#8217;s first half, then between $0.85\/lb. and $0.90\/lb. for about three months, from August through October.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span style=\"color: #000000;\">Figure 1. ICE December &#8217;23 Contract Price<img loading=\"lazy\" decoding=\"async\" class=\"wp-image-3228 aligncenter\" src=\"https:\/\/agrilife.org\/agecon\/files\/2023\/11\/graph-1-112923.png\" alt=\"\" width=\"641\" height=\"299\" \/><\/span><\/h4>\n<h5 style=\"text-align: center;\"><span style=\"color: #000000;\">Source: <a style=\"color: #000000;\" href=\"https:\/\/www.barchart.com\/futures\/quotes\/CTZ23\/overview\">Barchart.com<\/a><\/span><\/h5>\n<p><span style=\"color: #000000;\">More recently, the December \u201923 contract saw a two-week downslide from the end of October through the beginning of November to about $0.75\/lb. before rebounding back to $0.80\/lb. on November 24.<\/span><\/p>\n<p><span style=\"color: #000000;\">The year-to-date cash price, according to <a style=\"color: #000000;\" href=\"https:\/\/www.barchart.com\/futures\/quotes\/CTY00\/performance\">Barchart.com<\/a>, has fluctuated between a high of $0.88\/lb. on January 26 and a low of $0.72\/lb. on November 8.\u00a0 Currently, cash cotton is priced in the mid-seventy cent range.<\/span><\/p>\n<h3><span style=\"color: #000000;\"><strong>Cotton Supply &amp; Demand Outlook<\/strong><\/span><\/h3>\n<p><span style=\"color: #000000;\">So, what can we expect from the 2023\/24 crop heading into the new year?\u00a0 In the most recent WASDE report, released on November 9, USDA continues to revise its projections for both production and use (see Table 1).\u00a0 On the supply side of the balance sheet, production was increased by 270,000 bales, bringing projections back in line with the September forecast.\u00a0 On the demand side, USDA continues to decrease their projections for total use, reducing their estimate in the November report by 100,000 bales.\u00a0 These changes amount to a roughly 400,000 bale increase in expected ending stocks.\u00a0 This is a somewhat bearish report, and USDA revised their expectation for the 2023\/24 season average farm price down by three cents to $0.77\/lb.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span style=\"color: #000000;\"><strong>Table 1. WASDE Estimates for Cotton Supply and Use, November 9, 2023<img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-3229 aligncenter\" src=\"https:\/\/agrilife.org\/agecon\/files\/2023\/11\/table-1-112923.png\" alt=\"\" width=\"575\" height=\"378\" \/><\/strong><\/span><\/h4>\n<h5 style=\"text-align: center;\"><span style=\"color: #000000;\"><strong>Source: World Agriculture Supply and Demand Estimates, November 9, 2023<\/strong><\/span><\/h5>\n<h3><span style=\"color: #000000;\"><strong>Macroeconomic Conditions Heading into 2024<\/strong><\/span><\/h3>\n<p><span style=\"color: #000000;\">Future macroeconomic conditions represent potential hindrances to cotton prices in 2024.\u00a0 Cotton is a major input into many goods consumers can forgo purchasing during periods of slow economic growth and\/or high prices. \u00a0Thus, when demand for these goods is low, demand for cotton also tends to be low.<\/span><\/p>\n<p><span style=\"color: #000000;\">World<a style=\"color: #000000;\" href=\"https:\/\/www.imf.org\/en\/Publications\/WEO\/Issues\/2023\/10\/10\/world-economic-outlook-october-2023\">\u00a0economic growth<\/a> is projected to slow in 2024, down from 3.0% in 2023 to 2.9%.\u00a0 While this is not catastrophic by any means, without more robust growth, it is hard to predict that demand for cotton will increase next year.<\/span><\/p>\n<p><span style=\"color: #000000;\">Another possible area of concern is interest rates.\u00a0 Inflation in the United States has decreased significantly since this time last year, down from about 7.7% in October 2022 to 3.2% in October 2023; however, this is still above the Federal Reserve\u2019s stated target of 2% inflation.\u00a0 To combat inflation, the Federal Reserve has increased the <a style=\"color: #000000;\" href=\"https:\/\/www.forbes.com\/advisor\/investing\/federal-funds-rate\/#:~:text=How%20Does%20the%20Federal%20Funds,currently%205.25%25%20to%205.50%25.\">federal funds rate<\/a> from near zero to its current level between 5.25% and 5.50%. \u00a0In general, interest rates and commodity prices share an inverse relationship, so higher interest rates will tend to lower the prices of commodities like cotton.\u00a0 At the same time, higher interest rates tend to increase the value of a nation\u2019s currency, which reduces international demand for the commodities it produces.<\/span><\/p>\n<p><span style=\"color: #000000;\">It remains to be seen what the Federal Reserve will do in terms of monetary policy in 2024.\u00a0 After raising the federal funds rate to its current level in July, Fed officials chose to keep interest rates unchanged in both its September and October\/November meetings.\u00a0 That said, at least some Fed policy makers have <a style=\"color: #000000;\" href=\"https:\/\/www.reuters.com\/graphics\/USA-ECONOMY\/FED\/lgpdwawwzvo\/\">signaled a willingness to raise rates further<\/a> if need be.\u00a0 For now, it seems to be a safe assumption that interest rates will remain at least where they are and may in fact increase in 2024.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As we come to the end of the year, what do the fundamentals for the cotton market look like?\u00a0 In this post, we look at how cotton prices have moved&#8230; <span class=\"read-more\"><a href=\"https:\/\/agrilife.org\/agecon\/high-plains-ag-week-11-29-2023-cotton-market-update\/\">Read More &rarr;<\/a><\/span><\/p>\n","protected":false},"author":2185,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-3226","post","type-post","status-publish","format-standard","category-uncategorized","entry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>High Plains Ag Week 11\/29\/2023 \u2013 Cotton Market Update - Ag Economics on the Plains<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/agrilife.org\/agecon\/high-plains-ag-week-11-29-2023-cotton-market-update\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"High Plains Ag Week 11\/29\/2023 \u2013 Cotton Market Update - Ag Economics on the Plains\" \/>\n<meta property=\"og:description\" content=\"As we come to the end of the year, what do the fundamentals for the cotton market look like?\u00a0 In this post, we look at how cotton prices have moved... 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