Of the 16 million bales of U.S. cotton expected to be harvested this year, about 280,000 could come from Arizona if producers meet the five-year average of 1,350 pounds per acre.

Cotton fields are doing well, say farmers and industry experts at this year's Arizona Cotton Growers Association annual meeting. The event, held in Sedona in June, attracted a record 188 attendees, according to Jadee Rohner, executive director of the Arizona Cotton Growers Association.

In Arizona, farmers have planted more than 102,000 acres of cotton this year, Rohner said, compared to just over 91,000 acres last year and more than 107,000 acres in 2022.

Luke Bayci, a cotton trader and president of Artisan-Windburne, Inc., told Arizona cotton growers at their annual meeting that the unusually cool spring planting season and lack of rain across the state have resulted in “phenomenal stands” of irrigated cotton.

Cotton markets

Bayci was not entirely optimistic about U.S. cotton markets in his presentation to Arizona farmers. Increased U.S. production and foreign competition from China and Brazil could keep U.S. cotton prices between 68 and 84 cents per pound, as the surplus is estimated at 3.7 million bales of U.S. cotton.

Brazil and China are close trading partners, says Bayci. In addition, Brazil has increased its production by two million bales in the last two years. China is involved here in that it is a major consumer of global cotton and Brazil is its main supplier. In addition, Brazil is China's second largest donor, according to Bayci. Brazil also benefits from the sale of Chinese cotton pickers, which costs Brazilian farmers about $600,000, according to Bayci.

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Increased cotton production in Brazil and Australia continues to hurt U.S. exports, according to Jody Campiche, vice president of economic and policy analysis at the National Cotton Council, as tariffs remain in place on U.S. goods but those restrictions have been lifted on Australian cotton.

Before the trade war that affected U.S. crops, Brazil did not have the relations with China that it has today. The trade war has changed all that, Campiche said.

“They have continued to expand their cotton production and that continues to hurt us,” she said of Brazil.

According to Bayci, heavier rains in Australia during the last growing season have led to more quality defects in a crop estimated at five million bales. Australia is currently China's seventh largest trading partner.

Australia has also benefited from trade wars in recent years, which have seen tariffs imposed on US exports. China does not currently impose tariffs on Australian goods.

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Chinese cotton production has fallen by 3.5 million bales in the past two years, Bayci said, adding that the country reportedly has 2.65 million bales stored in consignment warehouses awaiting purchase by domestic factories in China.

“Economically speaking, the labor market in China is shrinking,” said Bayci. “Unemployment is high and the real estate market is at rock bottom.”

In contrast, India has shown overall resilience despite high inflation and supply chain bottlenecks, he added. Recently, cases of child labour have been reported in India, which is expected to produce between 27 and 29 million bales of cotton this year.

Agriculture Act

Campiche told farmers that the National Cotton Council continues to work with lawmakers on amendments to the Farm Bill. A priority for the NCC is to pass the new Farm Bill by the end of this year, although it is not expected to be taken up in the House of Representatives until September.

The cotton industry's recommendations for the farm bill include, among others, increasing the interest rate on marketing loans for upland cotton, increasing warehouse credits from the current maximum amount required by law, and increasing the reference price to better reflect current production costs.

Campiche said passage of a Farm Bill this year is critical for the U.S. cotton industry. While some in Congress are pushing for an extension of the last Farm Bill rather than passing a new one, NCC continues to push for the new Farm Bill with positive provisions for U.S. cotton.

“We will continue to spread the message that not passing a new farm bill this year will not work for the industry,” she said.