What is in this article?:
Among the threats to the profitability of U.S. cotton is China, the 800-pound gorilla in the global cotton industry. China's cotton stockpiles total more than 50 million bales, or 60 percent of global cotton stocks.
Calcot Limited cotton cooperative leadership includes, from left, Chairman Ron Rayner, Goodyear, Ariz.; Director Greg Wuertz, Coolidge, Ariz.; and President Jarral Neeper, Bakersfield, Calif.
While the U.S. cotton industry faces a plethora of challenges – including Chinese fiber stockpiles, lint price, an unresolved farm bill, and drought – the fiber industry continues to evolve given these uncertain times.
Yet Calcot Limited President Jarral Neeper remains optimistic about the future of cotton. The Far West cotton marketing executive waded through a pool of issues during the cooperative’s 86th annual meeting held in Tempe, Ariz., in late September.
Calcot, based in Bakersfield, Calif., markets cotton for about 1,000 grower members in California, Arizona, New Mexico, and Far West Texas.
Neeper says the 2012-2013 cotton season was a fairly typical cotton-marketing season compared to the previous two years of volatile prices.
Over the last 12 months, the average weekly high for Upland cotton futures was 81.85 cents per pound. The average weekly low was 78.19 per pound. The weekly average close was 79.98 per pound.
The absolute high was higher, of course, and the absolute low was lower, but on average, prices traded in a very narrow range in great contrast to recent history. The year included a 350-point range; quite the opposite of the price volatility several years ago.
“This was a return to something more normal, price-wise,” Neeper said. “We’re not as high as we were but we’re also quite a ways away from the very low prices we saw four years ago.”
In late September, New York cotton futures hovered in the low-to-mid 80-cents range. Neeper expects more of the same for the short term.
“These prices are fair enough. The market seems to be stuck,” Neeper said. “Prices must be low enough for the buyers and high enough for the sellers.”
Any talk of prices inching higher to 86 or 87 cents, Neeper says, hits a “wall of resistance.”
“In the short term, I think cotton prices will stay in this sideways band for a while unless China makes its next move or bad weather such as tornadoes and hurricanes impact a major cotton-growing region in the world,” Neeper said.