US cotton competes in a world market. In recent years, domestic mill use of cotton has steadily declined. Therefore, an increasing amount of US cotton is sold to non-US mills and processors. As such, world supply and demand could be considered the overall largest influence on cotton prices within the US. In particular, the production and consumption of cotton in countries such as China and India, which are large buyers of US cotton can have profound influence on market prices. The price received by a cotton farmer is influenced by these and myriad of other factors, such as government farm programs, domestic production and consumption, and international trade agreements.
Fiber quality also determines the value of cotton. Essentially every bale of cotton produced in the U.S. is analyzed by the USDA Cotton Classing system to determine such properties as color, leaf grade, staple, micronaire, length uniformity, strenght, trash content, and foreign matter.
