Texas Tech market specialist calls current cotton market ‘weak’

LUBBOCK, Texas (KCBD) - A local market specialist calls the current cotton market weak as the price of the crop falls, and this can impact South Plains producers’ futures.

Darren Hudson is the Larry Combest Endowed Chair for Agricultural Competitiveness at Texas Tech. He said we hit a contract high with cotton prices a couple months ago, with a price of 82 cents, and as of late November it was trading in the mid 70s.

“Significant drop from where we were, but it’s holding steady at this point,” Hudson said.

Historically, Hudson said the mid 70s are good for cotton, but producers are experiencing high input cost, making that price inadequate.

“If we look at 77 cents futures price, is probably around 72 cents local cash price, and 72 cent local cash price is below the cost of production,” Hudson said.

He says the futures price can create a headache for the 2024 crop as farmers make plans on what’s best for them.

“We have to think about what’s the potential crop value going to be when they start making decisions about planting next Spring, and the futures price sets that insurance price,” Hudson said.

Meaning, in the mid 70s range, another loss would be even harder on South Plains producers.

“So, if they have a crop loss again next summer, it will be worth even less,” Hudson said.

He says this is the bottom range of prices, so it’s a cause for concern.

“At this range, given the input cost, yeah this is a cause for concern about profitability going forward,” Hudson said.

Hudson said the market is weak right now because of concerns about global demand for cotton. As for when those prices will rise again, he said that won’t happen until that demand rises.