(Baton Rouge, LA) — Southern growers are just getting started on rice harvest and the numbers coming out of this season tell two very different stories at once: input costs are finally easing off their spring peaks, while a historic pullback in Arkansas rice acreage has pushed futures prices to levels not seen in years.
Dr. Michael Deliberto, associate professor and Louisiana Farm Bureau Endowed Professor in Agricultural Policy at the LSU AgCenter, joined us earlier this week to break down where cotton and rice stand heading into August — and why higher prices aren’t translating into breathing room for producers just yet.
Input costs easing, but still elevated
Fuel and fertilizer prices are pulling back from the peaks they hit in April, Deliberto said, and that relief is showing up across commodities. But for management-intensive crops like rice and cotton — both heavily reliant on irrigation in Louisiana — the savings are modest. Cotton production costs have dropped from $856 an acre in April to roughly $825 an acre now, but that’s still well above the $750–$770 range growers were budgeting in January. Rice tells a similar story, with per-acre costs climbing from $785 in January to nearly $890 today, driven largely by irrigation fuel during the peak watering months of May, June and July.
“When we say fuel has gone down to four dollars a gallon, it’s still a big cost to our producers, especially for cotton,” Deliberto said.
Arkansas acreage report reshapes the rice market
The biggest story in rice this year has been acreage — and the June 30 USDA acreage report delivered the number the industry had been bracing for. Harvested rice acres in Arkansas fell from roughly 1.2 million to around 860,000, a dramatic year-over-year drop that Deliberto said fundamentally shifted the market’s supply picture. Traders had already priced in a decline, but the scale of the cut still moved futures: September rice climbed to $13.71 per hundredweight, with the November contract trading above $14.
Even so, Deliberto cautioned growers not to mistake higher prices for a healthy margin. He estimated producers need $10.50 to $11 per hundredweight just to cover direct production costs — before accounting for land rent or machinery ownership. Farm bankruptcies remain a real concern, with Chapter 12 filings running high in Arkansas and Minnesota, and some major cooperatives closing rice dryers due to reduced throughput.
There’s also a policy tailwind developing. Deliberto pointed to a forced-labor trade investigation that’s expected to raise tariffs on imported rice by roughly 10 to 12%, which could curb competing supply from Thailand, India and Pakistan and improve U.S. price competitiveness. Meanwhile, ongoing uncertainty around the Strait of Hormuz — opening and closing amid Middle East tensions — along with a second straight monthly rise in the FAO’s rice price index, is adding a food-security dimension to the market. Old-crop sales, particularly long grain, have picked up, and recent export activity into Mexico and Latin America has been encouraging, even as South American rice continues to compete for those same markets.
Cotton: acreage absorbed, but the demand story is what matters now
Cotton acreage came in about 210,000 acres above March planting intentions, and growers ultimately planted 5–6% more cotton than a year ago. The market shrugged it off, Deliberto said, with attention now shifting to demand-side developments — including USDA’s Buy American Cotton Act initiatives and a pending trade investigation that could reshape how the U.S. sells cotton to buyers like Bangladesh, potentially through a tariff-rate quota structure.
There’s also a wildcard in upcoming trade talks between President Trump and China’s president: could cotton get folded into a deal the way soybeans have, opening the door to flash sales?
On price, Deliberto said 80–81 cents is the market’s first real resistance level, with 82–84 cents the next target if that breaks. Growers, he noted, are looking for 85–87 cents to comfortably cover their cost of production given how expensive cotton has become to grow. Between now and harvest, the market will be watching abandonment rates out of Texas and Georgia — historically ranging from 18% up to 40% in drought years — as well as how much ground the U.S. has lost to Brazil, which has captured roughly 2% of global cotton market share by supplying higher-quality cotton to key Asian buyers.
Geopolitics keeps bleeding into the marketing plan
Deliberto tied much of this year’s volatility back to global conflict — the ongoing Russia-Ukraine war, now in its fourth year, and the U.S.-Iran tensions disrupting Middle East shipping. Attacks on Black Sea grain infrastructure have raised questions about how much of Russia’s wheat crop will actually reach export markets, a dynamic that sets the tone for global wheat pricing even though Mid-South growers plant relatively little winter wheat themselves.
What growers should be watching
Deliberto’s core message: know your cost of production and know where your sell orders sit. LSU AgCenter’s spring and summer production meetings pair economists with production and irrigation specialists specifically to help growers reset those benchmarks as conditions shift. With PLC payments for the 2025 crop year landing in October, and USDA’s own 2027 cost-of-production forecasts still running well above historical norms, Deliberto expects next year to look a lot like this one — elevated costs and thin margins — compounded by recent damage from the remnants of Tropical Storm Arthur across central Louisiana grain acres.
“2027 — looks like it’s going to be another 2026 with extremely thin margins,” Deliberto said.
WATCH: The full conversation with Dr. Michael Deliberto can be found below:
