The pain of low agricultural commodity prices is exceeded only by the excruciating consequences of extraordinarily high prices.

No one knows that better than the U.S. cotton industry, which has seen cotton demand plummet by 12.5 million bales in the wake of prices that reached an astounding $2.30 per pound in 2011.

California’s cotton growers were told at the 14th annual meeting of the San Joaquin Valley Quality Cotton Growers Association that the hangover will remain for at least another marketing season.

High prices “ration demand,” according to veteran cotton marketer Bruce Groefsema, sales and marketing consultant for the association.

That is particularly agonizing since the cotton industry’s check-off program has spent decades moving cotton from just 30 percent of the textile market to more than 60 percent only to see 8 percent disappear almost overnight as prices rose from 90 cents to stratospheric levels, mauling demand. World economic woes also contributed to the sharp decline in cotton consumption.

J. Berrye Worsham, Cotton Incorporated president and CEO, said the industry is rebounding, but it is likely to be a long haul with new marketing paradigm challenges.

It would bode well for other California commodities to learn from what happened to cotton when prices crammed farmers’ bank accounts at very high long-term consequences. It is not uncommon today to hear California farmers, especially those producing almonds, walnuts and pistachios, to fret a bit about crops falling short of promotion-created demand, resulting in high prices. Prices like those seen for cotton can kill the demand side of the equation quickly.

It was so devastating that foreign cotton buyers have not honored contracts on U.S. cotton worth nearly $1 billion, covering sales of more than 4 million bales. The industry has turned to the federal government to intervene to get the money.

Fortunately, members of the SJV quality cotton association received payment for all their 2011-2012 cotton marketed in two pools, one put together early to take advantage of early prices, according to Association Executive Vice President Greg Palla.

Groefsema reported good returns for pools: $1.11 and 113 per pound for saw-ginned Acala pools, $1.16 and $1.18 for roller-ginned Acala and $1.50 and $1.56 for Pima.

Some 6.5 to 7 million bales of upland will be added to already burdensome carryover that carries a stocks to use ratio of more than 70 percent. It should be around 50 percent to generate good prices for cotton, according to Groefsema.

Half of the 78 million-bale world carryover is in China, much of it expensive cotton the Chinese government bought from local growers. Once again, China stands as the 800-pound gorilla in the world cotton market and no one knows when it will be selling or buying.