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High-Quality Cotton Attracting Export Demand, Higher Prices

Dr. John Robinson, Texas A&M Agri-Life Extension Service cotton marketing economist

Special Report

By BLAIR FANNIN
TEXAS A&M AGRILIFE

The 2016 U.S. cotton crop produced high yields and high-quality fiber, triggering a spike in export demand and higher market prices, according to a Texas A&M AgriLife Extension Service economist.

“No question, we had high-quality cotton produced in 2016 that was widespread across the board,” says Dr. John Robinson, AgriLife Extension cotton marketing economist in College Station. “We had high yields, which resulted in more quality cotton to market. That put us in the cat bird’s seat.”

Since August, Robinson says the demand relationship has shifted “outward,” meaning more cotton has been flowing out to the export markets due to political unrest and India losing some of its market share. Cotton prices have reached the upper 70-cent range in recent weeks.

“Some of our export competitors had problems, whether it be political policy or India losing export market share, and we picked up the slack,” he says. “We were shipping more as a result of the India policy issue. That’s all great and mostly explains the strengthening in old crop futures. I don’t know if those will carry over into next year.”
Fashion trends, such as fitness wear, have shifted demand from cotton to synthetic materials, holding back demand for cotton.

“Instead of cotton expanding beyond population growth, it’s been limited by that fashion trend,” Robinson says.
However, trends tend to fade over time and consumer preferences may switch back to cotton.

Weather And Increased Acres
Robinson says it’s hard to predict whether U.S. cotton farmers will produce another year of top-quality
cotton.

“Weather is hard to predict,” he says. “I’m advising producers to be careful, since this strong demand may not be there and prices may not be as strong. You might want to do something with high prices now because they may not last. And you’ve got to factor in that we’ve potentially got a huge crop coming with the additional acres that were planted.”
For Texas, cotton crop conditions appear to be favorable heading into the summer growing season.

“So far we are good in terms of moisture,” Robinson says. “Most of Texas is showing adequate soil moisture. We are off to a good start. I saw a report that indicated a 50-50 chance for an El Niño event that could start as early as August.

“Those rains in August can make a big difference. You multiply that times the acreage increase and we could have a lot of supply, and a decrease in prices. We could see futures prices at 60 cents (per pound) or lower by harvest time.”

Texas AgriLife Research & Extension Center contributed this article. Blair Fannin is News Editor with the Texas A&M AgriLife Extension Service/Texas A&M AgriLife Research in College Station. Contact Fannin at 979-845-2259 or b-fannin@tamu.edu.