Cotton Market Update

John M. Riley, Extension Economist
By John M. Riley, Extension Economist February 24, 2014 14:32

Cotton Market Update

The holiday shortened week was active with futures starting out on Tuesday up roughly 40 points across 2014 contract months, then fell hard on Wednesday before rebounding a bit on Friday. A stronger U.S. dollar has dampened export sales, the driving force behind the recent bullishness in the market. Despite still being ahead of schedule with exports, the recent increased costs to U.S. trading partners as a result of the more expensive U.S. dollar has added pressure.

News out of Washington, D.C. from USDA’s Outlook Forum pegged total cotton plantings at 11.5 million acres for 2014, above the recent industry estimate of 11.3 million in early February and higher than the industry average January estimate of 11.0 million. So, the trend appears to be a slight increase in cotton acres as decision time approaches for producers. Lower corn prices have likely led to the shift, despite cotton’s roller coaster start to 2014.

A quick look back at how these three crops compare price-wise (and how acreage is allocated) is depicted in the two figures here. Both depict the price ratios of Soybeans-vs-Corn, Corn-vs-Cotton (scaled by one-half), and Soybeans-vs-Cotton (scaled by one-fourth) during the month of February. The first also shows U.S. acreage changes compared to 2000, while the second shows Mississippi acreage changes compared to 2000. As cotton became more attractive leading up to planting in 2011 (as seen by the dip in the red and green lines), a shift to more acres for cotton is seen (although still lower than 2000, both U.S. and Mississippi acres increased).

Also in the figures are the current February price ratios for the three crops. Despite corn’s fall, soybeans appear to be the current winner in the acreage battle. The Soybean-vs-Corn ratio is near 3.0 (i.e., soybean price is roughly three times the price of corn). The Soybean-vs-Cotton ratio has actually moved in favor of beans as well. It is currently near 15.75 meaning soybean price ($/bu) is almost 16 times the price of cotton($/lb); however in the chart it is depicted at almost 4, but keep in mind this ratio is scaled by one-fourth (4 times 4 equals 16). The Corn-vs-Cotton ratio has dropped significantly, implying cotton prices have become more attractive when compared to corn.

Crop P Ratio v US Acres Crop P Ratio v MS Acres

Print Friendly
John M. Riley, Extension Economist
By John M. Riley, Extension Economist February 24, 2014 14:32
Write a comment

No Comments

No Comments Yet!

Let me tell You a sad story ! There are no comments yet, but You can be first one to comment this article.

Write a comment
View comments

Write a comment

Your e-mail address will not be published.
Required fields are marked*

Subscribe to receive updates

  • Soybean Harvest Aids

    Several calls have come in over the last week regarding soybean harvest aid options for various scenarios. In some cases, fields have been observed with varying degrees of maturity. In ...
  • Sugarcane Aphid Control with Falling Temperatures

    In 2014 we saw two brief time periods of less than satisfactory control with Transform on sugarcane aphids in grain sorghum across a broad geography. At the time we were mixing a ...
  • Pheromone Trap Counts, August 28. 2015

    Bollworm trap catches remained similar to last week, which is somewhat lower than average for this time of year. Tobacco budworm trap catches were somewhat higher this week. As most ...
  • Pheromone Trap Counts, August 21, 2015

    Bollworm moth trap catches were slightly higher in most counties this week but are generally lower than average counts for this time of year. Tobacco budworm moths continued to be ...
  • Defoliating Caterpillars in Peanuts

    We have had numerous calls over the last 2 weeks about caterpillars in peanut from all around the state. In every case, the calls have involved a complex of multiple species including bollworm/tobacco budworm, cutworms, armyworms, saltmarsh caterpillar, loopers, and rednecked peanut worm. ...
  • 3rd Annual Mississippi Sweetpotato Field Day Program- August 27th

    Mississippi State University will host its 3rd Annual Sweetpotato Field Day Thursday August 27 at the Pontotoc Ridge-Flatwoods Branch Experiment Station (8320 Hwy 15 S., Pontotoc, MS 38863).  Registration is ...

More Info By