Consumers may reap rewards of corn, cotton price

(nick on Adobe Stock)

The world’s most important and among the Valley’s largest crops see prices plunge at the same time

CENTRAL VALLEY – Ample supply of the world’s biggest and most important field crops caused the market price of both to plunge last week setting the table for lower food, transportation and clothing costs for consumers in the future.

Cotton plantings both in the San Joaquin Valley and across the nation are up. Likewise for corn, the most significant feed commodity for the huge, local livestock industry.

U.S. cotton futures traded down to 63 cents per pound, the lowest since November 2020, pressured by the strength of the dollar and prospects of increased supplies. Favorable weather conditions persist throughout the entire US cotton belt, with beneficial rainfall observed in Texas, Oklahoma, and Kansas, alongside anticipated future precipitation, contributing to downward price pressure.

In finance, a futures contract (sometimes called futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset-transacted is usually a commodity or financial instrument. Ag commodities are traded widely and closely watched to gauge future prices.

Cotton is the most widespread profitable non-food crop in the world. Its production provides income for more than 250 million people worldwide and employs almost 7% of all labor in developing countries. Approximately half of all textiles are made of cotton.

The timing in the drop in futures prices came as result of a USDA report issued July 28 that projected almost a million acres more cotton has been planted than estimated in March. In its June acreage report, USDA estimated 2024-25 U.S. cotton plantings at 11.67 million acres, up 14.1% from 2023.

Farmers are planting more cotton this year. American Upland (AUP) cotton planted area is estimated to have increased 13.9% to 11.49 million acres. Extra-long staple (ESL) cotton producers planted 182,000 acres, up 23.8%. ESL cotton is stronger, softer and more durable and is used in higher quality products while AUP is a shorter strand of cotton used in most cloth products.

Good news for tortillas

The future price of corn also took a dive last month after another USDA report on corn plantings. The much-anticipated acreage report showed that farmers sowed 91.5 million acres of corn, 1.5 million acres more than they had planned to plant, according to the early-spring Planting Intentions survey. USDA also reported that June 1 corn inventories were sharply higher than anticipated.

The combination of a larger stockpile and greater corn acres pushed September corn futures down 32ȼ to $4.085 per bushel. That is half the cost it was in the spring of 2022 that drove up feed costs for the American livestock, poultry and dairy industries and increased the price of corn-made fuel blended with gasoline.

For now, feed costs are low and likely to stay that way as lower corn prices, similar to lower cotton prices, should be passed on to consumers on all products they impact. Feed costs are more than half the cost of making milk.

Corn is the second most plentiful cereal grown for human consumption, and many cultures around the world have lived on this grain. Corn is a versatile crop, and everything on a corn plant is usable food products including corn oil, corn meal, corn syrup and even bourbon. The most important refined corn products are corn sweeteners, which last year accounted for more than 56% of the national nutritive sweeteners market like that of Jarritos soda.

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