POP Payment between Christmas and New Year.
12-30-2025
1.98 cents today. The change on Friday is expected to be lower by about 2/3's of a cent. If you want to POP your cotton before Friday, I am told that you should sign the proper paper work by noon on Wednesday (Dec 31) at the FSA office.
Folks that want to get money for the 2025 calander year are selling and POPing cotton. They can also stay in the game by buying a call, but this is not essential. This strategy makes some sense, particularly when you look at the safty net this year.
The question I get is, "Should I POP my cotton even if I do not want to sell now?" My answer to this question is based on the following points:
- It can go up or down next week so whether or not we are looking at the highest POP for this crop is unknow, but we do know that if the market drops, then the POP will go back up.
- If I POP, then I cannot put it under loan. (For folks looking at a long wait, the loan makes a lot of sense)
- If we POP and the market goes up, then we will make about a little more than a half of a cent more by POPing now and waiting.
- If we POP and the market goes down, then I could loose whatever the drop is if I wait and end up selling during this drop.
- A lot of folks have the feeling that the market will have to increase some to get a 2026 crop planted. That is probably true. It just depends on if or when you will feel forced to sell.
The risk of a dropping market in early January seems to be higher than the risk of loosing some POP payment this week. I may believe the market will get stronger eventually and that makes me want to wait on selling; however, I would not add risk by POPing the cotton on Wednesday to save 2/3's of a cent or so. Don't forget that I am an optimist on things like this, but I think I might be an unlucky optimist. This also keeps me from POPing because If I POPed and didn't sell, the market would drop 10 cents and then I would just have to blame my bad luck.
So I would not POP since I am not selling.
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