Reduced World Cotton Stocks Driving Prices (Feb 25, 2010)

Good demand for cotton products and reduced cotton production worldwide should mean good prices for U.S. cotton farmers as they begin planning for the 2010 cropping season.

Southeastern cotton growers had a good crop in 2009, though as much as 20 percent was likely lost to late season rains. Similar weather  problems hampered cotton production in other areas of the world.

With demand for cotton products weathering the economic recession as  well or better than most consumer goods, reduction in world stocks of  cotton over the past two years is likely to drive cotton prices up for  the 2010 crop.

Cotton growers from California to the Carolinas planted slightly more  than nine million acres in 2009, down 3.5 percent from 2008. As much a  15 percent of the crop was abandoned — in large part to record  rainfall from the middle to traditional end point of cotton harvest in  the Southeast and Mid-South.

What started out to be a great crop in the Southeast, especially in  the upper Southeast, was significantly reduced by heavy rainfall. Mike  Griffin, who farms about a thousand acres of cotton near Suffolk, was  still picking cotton well into January. He says he expects to lose  about 15 percent of the crop to the wet conditions.

Some of the abandoned acreage came in southwest Georgia where several  tropical weather fronts dumped more than 20 inches of rain during what  should have been peak harvest season.

While weather related yield cutbacks created sporadic economic  problems for farmers in the Southeast, these woes did further reduce  the total amount of cotton available in the world and will likely  contribute to higher prices for the 2010 crop.

Because of the delayed harvest, total U.S. production is difficult to  determine, but should finish up around 12.5 million bales.

On a global basis cotton production is expected to be down almost five  million bales. Small gains in production in South and Central America  are more than offset by China’s decline in cotton production of over  five percent.

Source:

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