Of the estimated 16 million bales of U.S. cotton expected this year, about 280,000 of those could come out of Arizona if producers achieve the five-year average of 1,350 pounds per acre.

Cotton fields are up and doing well, according to growers and industry experts attending this year’s annual meeting of the Arizona Cotton Growers Association. The event, held in Sedona in June, drew a record 188 attendees, according to Jadee Rohner, executive director of the Arizona Cotton Growers Association.

Arizona growers planted over 102,000 acres of cotton this year, Rohner said. This compares to just over 91,000 planted acres last year, and over 107,000 in 2022.

Luke Bayci, a cotton merchant and president of Handwerker-Windburne, Inc., told Arizona cotton growers at their annual meeting that the oddly cool spring planting season in Arizona and lack of rain has let to “phenomenal stands” of irrigated cotton across the state.

Cotton markets

Bayci wasn’t 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 carryover is estimated to be 3.7 million bales of U.S. cotton.

Brazil and China are close trading partners, Bayci says. Moreover, Brazil has increased production by two million bales in the past two years. Where China fits here is they are a large consumer of world cotton, and Brazil is their chief supplier. Additionally, Bayci says Brazil is China’s second-largest borrower of money. Brazil is also benefitting from the sale of Chinese cotton pickers, which Bayci says costs Brazilian farmers about $600,000.

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According to Jody Campiche, vice president of economics and policy analysis with the National Cotton Council, the increased cotton production from Brazil and Australia continues to hurt U.S. exports because of continued tariffs on U.S. goods, and the elimination of those restrictions on Australian cotton.

Prior to the trade war that affected U.S. crops, Brazil did not have relationships with China that it does now. The trade war changed all that, Campiche said.

“They’ve continued to expand their cotton production, so that continues to hurt us,” she said of Brazil.

According to Bayci, heavier rains in Australia during the recent growing season caused more off grades in a crop estimated to be about five million bales. Australia is currently China’s seventh-largest trading partner.

Australia has also benefitted during the trade wars of the past few years that saw tariffs placed on U.S. exports. China does not currently charge tariffs on Australian goods.

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Chinese cotton production is down about 3.5 million bales over the past two years, Bayci said. The country is said to be holding 2.65 million bales in consignment warehouses, awaiting purchase by domestic mills in China.

“Economically speaking, China has a shrinking labor market,” Bayci said. “They’ve got high unemployment, and their real estate market is in shambles.”

Conversely, India has shown overall resilience during high inflation and supply chain constraints, he added. Recently there were child labor issues reported out of India, which is expected this year to produce between 27 and 29 million bales of cotton.

Farm Bill

Campiche told growers that the National Cotton Council continues to work with lawmakers on Farm Bill changes. A priority for NCC is passage of the new Farm Bill by the end of this year, though it is not expected to see floor time in the House of Representatives before September.

Among other things, cotton industry recommendations for the Farm Bill include increasing the Upland cotton marketing loan rate, increasing storage credits from the current statutory max, and an increase in the reference price to better reflect current costs of production.

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

“We’ll continue to convey the message that (not passing a new Farm Bill this year) isn’t going to work for the industry,” she said.