What is in this article?:
- The U.S. cotton price bubble is not likely to rupture soon.
- The world cotton market is in uncharted territory in a cotton market and world economy that is far from traditional.
- There will be more cotton produced and consumed in the world in 2011-2012. However, production may not be as robust as prices would indicate.
- “We had a grower meeting in Imperial Valley and 25 growers showed up. They wanted to get back into cotton, but no one has pickers.
China remains as cotton enigma
China continues to be the enigma in the world cotton market. The CEO of the Bakersfield, Calif.-based cotton marketing cooperative said Chinese cotton consumption for the first three months of the current marketing year was running at an annual rate of 60 million bales, far above his projected 48-million bale estimate.
“Yarn production data is monstrous coming out of China. Pakistan and India are exporting yarn to China like crazy.
“We used to sit around and wonder what would happen if those Chinese would buy just one more T-shirt. We may be finding out what would happen,” he said.
Neeper projects the U.S. will export 14 million bales.
World carryover will increase under Neeper’s 124 million bale production scenario, but only by about 2 million bales. The U.S carryover will double, but it will be a manageable 3.4 million bales for 2011-2012 ending stocks.
High cotton prices are generating retailer headlines, and experts predict there will be polyester substitution for cotton where possible. “Polyester is cheaper than cotton, but polyester is by no means cheap.”
Neeper believes cotton will continue trading on the futures market in the 80-85 cent to $1.05 to $1.10 range until planting time.
“Everything is pointing to a pretty good year next year,” Neeper said.
Prices like that would seemingly spark a lot of enthusiasm. However, Robinson said prices for alternative crops like corn, peanuts and soybeans will temper the desire for current producers to dramatically increase cotton acreage or jump back into cotton. “And, I think some growers have learned to enjoy growing corn and soybeans versus a management-intensive crop like cotton,” Robinson added. “There is more leisure time and less labor not growing cotton.”
Economic and non-economic factors will also be part of the cotton equation for most growers.