Schroeder believes 80 percent of this year’s U.S. crop has been sold before the final bale has been ginned. “Mill buyers want to get it before it is gone.” He said the shortage of supply to meet demand is not going away soon. Buyers who missed out on the 2010 crop are already contracting for 2011 cotton at attractive prices.

“The sourcing summit was amazing in the amount of cotton that was sold in a very short time period,” he added.

The young merchant could not speculate on what is the average price of bales already sold. However, he noted that last spring cotton marketing analysts were calling for growers to hedge their upland crop at the 75- to 80-cent level. “I believe a lot of growers sold their crop then. No one saw the price levels reaching the $1.50 level they have recently.”

Shortly after the summit, upland prices plummeted 30 cents a pound in a week on economy-cooling news out of China. “It had nothing to do with cotton. It was about China trying to slow down its economy a little bit and curb inflation.” China is the biggest buyer of U.S. cotton and any economic news out of there has an impact on the cotton market.

“I think it is only temporary. It is part of the volatility that is in the market right now,” he explained.

With most of the U.S crop sold, Schroeder expects the market to remain price strong for growers for at least a year.

“I do not see the supply and demand balanced for next year either.”

Schroeder says 15 percent of the Extra Long Staple 2011 Pima cotton grown primarily In California has already been sold. “We will be out of 2010 Pima by March or April this year,” he speculated.

With prices expected to remain strong for all 2011 U.S. cotton, it would be safe to assume a sharp increase in cotton acreage. Schroeder does not necessarily believe that. Schroeder has a good overview of the U.S. Cotton Belt with Jess Smith and Sons offices in Inverness, Miss.; Memphis, Tenn.; Deming, N.M.; and Marana, Ariz.

Double crop soybeans and wheat in the Mid-South look very strong for next year and growers may not opt to add many new cotton acres in 2011. Corn may be another attractive alternative. Texas, he said, will be wall-to-wall cotton in 2011. “Texas has a phenomenal crop this year. Can they do it two years in a row? Who knows what the weather will be there next season?”