(Sixty percent of San Joaquin Valley cotton acreage will be planted to Pima cotton varieties once again this season. California is the leading Pima producing state in the U.S. Arizona, New Mexico and Texas make up the rest of the U.S. Pima belt. Prices have reached $3 per pound on the world market for ELS cotton. This is a report from Supima about the phenomenal run-up in prices and what the future might hold.)

There have been more news stories in the international press about cotton in the past 12 months than there have probably been in the last decade. Publications from the Wall Street Journal, Economist, New York Times, etc, have had stories about the supply/demand situation and the rapidly escalating prices of cotton this past year. Inquiries from those that know or care nothing about cotton are asking about cotton because they have seen the news.

The stories have focused on the more widely used Upland cotton and talked about worldwide production declines at the same time when demand began to increase. Someone described it as “The Perfect Storm.”

This might be true for Upland cotton, but what has occurred in the Extra-Long staple cotton industry was something that many people saw coming.  Perhaps not to the extent in price increases, but there were lots of warning signs that when demand returned, there would be a limited supply of ELS cotton available.

For the three-year period from 2005-2007, worldwide production of ELS/LS cotton averaged 3 million bales per year. For the past three years beginning in 2008 and ending with the 2010-2011 crop, total ELS/LS production averaged only 2 million bales per season. This amounts to almost a 40 percent decline over this three-year period.

There is not going to be a quick solution to the tight worldwide stocks of ELS cotton.  The stocks-to use ratio in producing countries is estimated to have declined from 17 percent in 2009-2010 to only 14 percent in 2010-2011, probably the lowest in history.

Even though projections are for an increase in ELS acreage in the USA, American Pima cotton will still be in short supply.  As of this week, 268,000 bales or about one-third of the expected new crop production has already been committed for export.