The cotton markets continue to remain depressed, with the December contract hitting a for-the-move low on Tuesday. Cash markets do not offer any consolation either. The most recent USDA report shows a 7-market average of spot prices is at 59.76 cents.
Cotton is often overlooked as a casualty of the ongoing trade wars with China and other countries, when it is one of the commodities most dependent on exports. According to WASDE reports, over the last 10 years an average of 84% of cotton production is exported each year. Comparatively, an average of 47% of soybeans and 15% of the corn crop are exported over that time.
In the 2023-24 marketing year, the largest destinations for U.S. cotton were China, Vietnam, and Pakistan, with China accounting for nearly 43% alone. China substantially reduced their purchases in the 2024-25 crop year, accounting for only 6% of purchases. Before the government shutdown, USDA data showed that cotton exports were on pace to be the lowest since 2014 this year, including only 7,000 bales exported to China. Other countries with significant textile industries do exist, but nowhere near enough to fill the gap left by China.
Navigating trade deals with countries that have a need for cotton may prove to be difficult. Most countries in Asia that can process large amounts of cotton are also able to grow their own, and face political pressure to protect their own cotton growers. For example, SourcingJournal reported earlier this month India increased their support price in order to promote purchases of domestic cotton. This is also evident in most of the trade deals that have already been struck. Carve-outs for wheat and other commodities have occurred in trade deals this year, but little news has come on guarantees of purchasing U.S. cotton. Until those trade deals are made, or at minimum tensions cool down, cotton prices will likely continue to trade in a lower range.