What is in this article?:
- SJV cotton harvest under way
- High prices
- Growers optimistic despite slow start in picking.
- Unseasonably cold, wet weather rolls through state as cotton crop opens up.
- Repeat of last season's rare territory prices not likely this season, but prices should remain strong for 2011-12 crop marketing year.
And just like last year’s weather, cotton prices are high once again — in the $1 range as the harvest begins. From there in the fall of 2010, they went into the stratosphere to above $2 per pound for Acala and more than $3 for Pima.
When they reached those levels, there was little cotton to be bought and those prices were unrealistic, supply “rationing” prices, according to Bruce Groefsema, sales and marketing consultant for the San Joaquin Valley Quality Cotton Growers Association.
Groefsema recapped the “rare territory” cotton prices ventured into over the past season. He does not expect a repeat of those record prices, but there also is “no need to despair” at cotton price prospects for the 2011-2012 crop.
The scenario that created the 2010-2011 perfect price storm is gone. For five straight years, world cotton consumption exceeded world production and that depleted supplies to unprecedented stocks to use ratios.
This spawned a worldwide planting frenzy with acreage worldwide increasing dramatically chasing those prices. However, Groefsema told association members at their annual meeting that stocks for both Acala/Upland and Pima are not burdensome going into this marketing season.
He believes many of those additional bales will be used by mills to rebuild stocks.
Prices may be where they started a year ago before the rocket ride, but Groefsemadoes not expect a repeat of last season, which for the SJV Quality Cotton Growers marketing pools averaged $1.8607 for Pima; $1.3462 for roller Ginned Acala; and $1.2462 for saw ginned Acala. Nevertheless, he expects prices to be “reasonably good for this year’s crop.”
San Joaquin Valley cotton growers and this quality cotton association find themselves in a unique position where the high quality attributes of both Pima and Upland cotton are more important price factors than New York Futures.
The San Joaquin Valley Quality Cotton Growers Association was formed in 1998 in response to the end of the valley’s one quality/one variety law, according to Greg Palla, executive vice president of the association.
It is made up of a group of prominent growers who organized to guarantee mills Acala quality cotton. Since the association was formed, Pima cotton has become the dominant cotton in the valley and Acala cotton has benefitted economically from that.
Both Pima and Acala cottons are longer and stronger than traditional Upland cottons.
Pima cotton is exclusively roller ginned versus saw ginned. Mills have discovered that roller ginned Acala will substitute for Pima in premium yarns and are willing to pay a premium of up to 10 cents per pound for roller-ginned Acala.
As much as 50 percent of the valley’s Acala cotton is roller ginned. Last season it was lower than that due to weather concerns.
Groefsema says this is decoupling both saw-ginned and roller-ginned Acalas from the New York Futures market as a pricing mechanism and more closely tying both to the fortunes of Pima cotton.