U.S. cotton planted areas for 2024 up 14%, bearish to ICE cotton

On Jun 28, ICE Dec contract slipped by 2.53% from 74.58cent/lb on Jun 27 to close at 72.69cent/lb, offsetting the week's increment. From Apr, ICE cotton fluctuated down from 85cent/lb, once reaching a low of 70cent/lb. In terms of the fundamental, the main reasons were the continual adjustment of USDA'S supply and demand sheet, historical high of Brazilian cotton exports and weak global cotton consumption. Despite of a round of rebound in May, ICE cotton still lacks positive stimulus and the bulls continue to test to below 70cent/lb.

On Jun 28, USDA released the acreage report: All cotton planted area for 2024 is estimated at 11.7 million acres, up 14 percent from last year. Upland area is estimated at 11.5 million acres, up 14 percent from 2023. American Pima area is estimated at 182,000 acres, up 24 percent from 2023. The report shows the possibility of U.S. cotton production increase.

In USDA's Prospective Plantings report in Mar, it showed an intended cotton planted area of 10.673 million acres for the year, up 4% from 2023 acreage. Upland cotton area is estimated at 10.5 million acres, up 4% from 2023. American Pima area is estimated at 203,000 acres–up 38% from last year.

Therefore, in Jun's report, the U.S. cotton planted area is increased by 1.027 million acres. In recent five years, the U.S. cotton yield is averaged at 827 pound/acre, and in 2023, the yield was averaged at 845 pound/acre. On concern about the better weather condition than last year, and better good-to-excellent ratio of crops, yield in 2024 is expected to be higher than last year. Based on the yield in 2023 and the abandonment rate of 15.5% in ten years, the increase of 1.027 million acres may lead to a 10% increase in U.S. cotton production (1.027 million acres*845 pound/acre*(1-15.5%)=733.3 million pound≈333,000 tons).

Of course, the specific evaluation may not be reflected until the USDA supply and demand report in July, but this undoubtedly brings a major bearish factor to the global cotton situation for 2024/25 season. Perhaps cotton prices will continue to be under pressure for a long time in the future.