LUBBOCK, TEXAS (RFD NEWS) — Cotton margins have improved modestly, even as fertilizer and fuel costs jumped after the Strait of Hormuz disruption tied to the Iran war. Terrain’s Marc Rosenbohm says the net effect of higher input costs and stronger cotton prices has left projected U.S. average cotton operating margins slightly better than they were before the conflict began.
Rosenbohm said the projected margin indicator was near $100 before the war, rose to about $125 by April 9, and reached roughly $150 by April 22. He said the same general trend was evident across major cotton-growing regions, even though individual farm outcomes vary.
Part of the support came from the market itself. Cotton prices rose more than corn, soybeans, and wheat from pre-war levels, and managed money moved from a large net short position to a net long position as the rally developed.
Terrain said the market now appears to be trying to buy cotton acres at the margin. Even so, Rosenbohm cautioned that near-term cotton prices still face upside risk from more energy disruption and downside risk if higher fuel costs weaken textile demand.
Farm-Level Takeaway: Cotton’s margin outlook has improved, but energy-driven volatility is still a major risk heading into planting and acreage decisions.
Tony St. James, RFD News Markets Specialist
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