The cotton market in 2025 is expected to remain dominated by bearish fundamentals, as demand continues to lag and the battle for market share takes center stage. Dr. O.A. Cleveland, a respected voice in the cotton industry, suggests that while there are some positive signs, the underlying market conditions are far from bullish. Without significant demand, a bull market is unlikely to emerge.

Bearish Fundamentals Persist
The March cotton contract has been stuck around the 66-67 cent support level, which has held firm several times in the past. While this has provided temporary stability, the risk of a further price decline remains. Speculative selling could push prices down to as low as 63 cents, Cleveland warns.

For mills, there’s little incentive to buy cotton on-call when prices are expected to remain stagnant or even decline. The oversupply of cotton relative to current mill needs makes purchasing on a hand-to-mouth basis the less risky option, as mills can meet week-to-week demand without worrying about significant price increases.

Export Sales: A Flicker of Hope
Despite weak fundamentals, there are occasional glimmers of hope in export sales. For example, upland cotton net sales reached 316,200 bales in a week when futures prices hovered around 69 cents. Moreover, upland shipments totaled 224,800 bales, setting a new marketing year high. While this could signal a potential shift toward improved export performance, Cleveland is cautious. The market had been positioned with expectations of a dockworker strike on the U.S. West Coast that never materialized, which could have artificially inflated shipment levels. Even with these positive developments, total shipments are still behind the pace needed to meet the USDA’s annual export forecast of 11 million bales.

Planting Decisions and Cotton’s Competitive Position
Looking ahead to 2025, cotton growers are facing difficult decisions regarding plantings. With cotton prices hovering around 69 cents, some farmers are considering switching to more lucrative crops. However, historical yield patterns and crop rotation strategies may keep cotton as a preferred option for many growers. The decision-making window is still open for about six more weeks, but the potential for significant price improvement appears limited, especially given the weak demand outlook.

Conclusion: A Year of Uncertainty
As cotton pricing battles to find direction in 2025, the market’s future hinges on two key factors: demand and competition for market share. While positive signs in export sales and shipments provide a glimmer of optimism, the overall market dynamics remain bearish. Unless demand strengthens significantly, the cotton industry may face another challenging year, with prices likely to remain under pressure. Cotton’s battle for market share, rather than a fundamental surge in demand, will likely dictate pricing trends throughout 2025.