With the price where it is right now and the fundamentals that exist in the global market, it looks like cotton will definitely make a comeback next year – especially in the Mid-South. Anytime you see the futures price go over 80 cents, it is very encouraging. I talked to a lot of consultants and farmers at the Mid-South Farm & Gin Show in Memphis, and they definitely anticipate some significant acreage shifts into cotton. This is very positive for everybody.
When you see cotton prices go over 80 cents, it makes everybody in the cottonseed business pretty excited. I also hope this translates into producers being excited about their own crop prospects. Frankly, I think we’ll see some shifts back into cotton in ‘08 because of this price trend. In addition to lint values going up, cottonseed prices at the gin are increasing. I see a lot of upside value for the farmer.
As a trader, how can you not have a positive reaction when the futures price goes over 80 cents? With this trend, I think you’re insuring that we’ll have a few more cotton acres. And we might even see some grain acres switching back to cotton. Does the price need to go over 85 cents? It probably does. If it goes over 90 cents, we’ll see even more cotton acres coming back to us. This will be especially true for farmers who planted corn last year. They still have time to make the switch for ‘08. There is one other factor to remember. It’s hard to keep a six-row picker parked in the shed not doing anything.
The increased prices for cotton can only mean one thing. Farmers will definitely be more flexible in their planting decisions. Even though some farmers might be locked into wheat, soybeans and corn, I can see them moving acreage back into cotton if these prices hold up. As a matter of fact, they could go ahead and plant these other crops and have plenty of time to decide whether to plant cotton. As volatile as the market is right now, farmers need to adapt to changing conditions. That’s how you survive today.
The increased cotton prices
give me a lot of optimism. It could definitely mean that 2009 will be
better than either 2008 or 2007. If anything, it will get a lot of folks
more interested in cotton. These are the same people who thought that
soybeans and corn were the best options. If the price holds up, I think
you’ll see some acreage shifts this year. There will certainly
be plenty of ginning capacity if the cotton acreage increases. If that
happens, you’ll see a lot of repair work on gins that hadn’t
been planning on spending that much money. That will be good for our