Cotton's Tug of War: China Shifts, Aussie Drought, and American Growers Weigh Their Options copertina

Cotton's Tug of War: China Shifts, Aussie Drought, and American Growers Weigh Their Options

Cotton's Tug of War: China Shifts, Aussie Drought, and American Growers Weigh Their Options

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This is your Daily Cotton Price Tracker with Vanessa Clark podcast.

Welcome to Daily Cotton Price Tracker with Vanessa Clark. I'm your host Vanessa, and today we're breaking down what's happening in the cotton market as we move through mid-January.

Let's jump right into the numbers. Cotton futures are experiencing some downward pressure today. March cotton is trading around 64.85 cents per pound, down 14 points, while May cotton is at 66.41 cents, down 9 points. We're seeing a pullback after some gains earlier in the week when March contracts briefly tested levels above 65 cents per pound for the first time since November.

So what's driving these moves? According to Cotton Incorporated's recent economic analysis, we've got some mixed signals. On the positive side, the USDA released revised supply and demand estimates showing slightly lower global production and higher mill use. However, the market is grappling with weak demand that's capping upside potential. Think of it like a tug of war between bulls and bears.

Here's what's particularly interesting for growers and traders. China's government has signaled a potential policy shift regarding its target price support system in Xinjiang. The National Development and Reform Commission emphasized prioritizing grain production for food security, which could limit cotton acreage support going forward. This announcement actually sparked a rally in Chinese cotton futures earlier this month, with prices rising over 1000 RMB per ton since early December.

On the supply side, Australia is facing significant headwinds. Officials expect 22 to 23 percent less acreage and production for 2025-26 due to water scarcity and low prices. Meanwhile, Indian cotton production continues trending downward, with 2025-26 yields down 19 percent from their 2013-14 peak.

For American growers, the picture is nuanced. U.S. cotton production was revised downward by more than 2 percent to 13.9 million bales. Fertilizer prices are climbing, with UAN 28 up 23 percent and potash up 9 percent over the past year. That means input costs remain stubbornly high while cotton prices hover around 65 to 69 cents per pound depending on contract month.

The key question everyone's asking is whether we'll see another round of U.S. acreage reduction for the 2026-27 season. A recent survey suggests acreage could remain flat year over year, but planting decisions typically come down in February when farmers are comparing cotton returns against corn and soybeans.

Thanks so much for tuning into Daily Cotton Price Tracker. Make sure you subscribe and join us tomorrow as we continue tracking these important market developments. I'm Vanessa Clark, and we'll see you next time.

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