- It has not happened in a long time but the opportunity to sell cotton at a dollar a pound became a reality Monday as a combination of factors sent the futures market above the heady benchmark.
The jump comes on news that supplies are falling rapidly; mills need cotton now and are concerned about supplies.
“I don’t know exactly what to think about it,” said Jeff Posey, a Roby, Texas, farmer and the 2010 Southwest High Cotton Award winner. “I’ve never sold dollar cotton before.”
He said he’s not likely to this year either, but he’s excited about the opportunity to sell for a profit. “We market through a pool, as do most of the farmers in the area, so we might not see $1 a pound.”
But Posey said the pool had done a pretty good job of capturing some fairly good prices. “So we may get some pretty good money out of the increase.”
He said he wouldn’t complain about 75 cents a pound.
He also wonders about next year. “Will we see more acres in cotton in 2011? Corn and wheat markets are also up.”
Posey said his crop looks good as he gets ready to harvest. “I’ll have some very good dryland cotton. And with prices above $1 a pound, it’s really exciting.”
"The opportunity that has been presented to growers this year is extraordinary," says Plains Cotton Growers Executive Vice President Steve Verett. "It is rare to see cotton prices at the levels we have seen over the past few months, much less to see them at the levels reached earlier this week. The fact that these prices are being supported by real market fundamentals is the best news of all and will hopefully extend beyond the 2010 harvest season."
“Take your money!” says O.A. Cleveland, Professor Emeritus, Mississippi State University.
“Cotton is at near historical highs and the market is saying give me some cotton,” Cleveland said. “It makes no sense to wait and look for the peak. Price and sell everything now. If a farmer feels like he just has to sell some cotton at the peak, hold five or 10 bales, or just one bale. But for now, take the money. We never know what the peak is until it’s come and gone.”
Cleveland said the current price uptick comes from several factors, chiefly a “very strong tightness in both U.S. and world cotton supplies.” That tightness, he said, is augmented by “stronger demand than we anticipated out of China.”