Cotton Prices - From the Ground Up

When we hear about high commodity prices for corn, wheat, or the recent historical high reached by cotton, it’s easy to see why people would think that farmers were making lots of money. In this week’s From The Ground Up, Bob tells us that the price you see at harvest time, isn’t normally the price the farmer gets for his crop.

“About this time last year cotton was just probably about 60% or nearly half of what it was , what it is currently for the December 2010 prices anyway, so a lot of that is just supply and demand and/or speculation about supply and demand, and it has driven prices up.”

Gaylon Morgan is an Agrilife Extension cotton specialist.

“The farmers are trying to moderate or they spread their risk out by basically pricing cotton throughout the year, so that they don’t, they’re probably not going to hit the highs, but they’re probably not going to hit the lows.”

Most cotton farmers had locked in their selling price before the price spike.

“From what I’ve heard most of the guys here in the Brazos River bottom were selling somewhere between 70 and 90 cents in that price range in getting for their cotton. There’s a basis level which is basically how much it costs to transport that cotton down to the gulf or wherever it’s going to go to be exported. So most of those guys you take anywhere from 7.5 to 10 cents off that price and that’s what the farmer’s probably actually getting.”

Marketing today is much more than selling a crop after harvest.

“You’re second guessing yourself as to when you should have marketed and all these other things too in addition to planning their actual expenses and their farming operations but just wondering why I didn’t hold off and sell some later or sell some earlier or whatever, so it’s kind of, it’s a challenge for them.”

And if t-shirts are made out of $1.20 a pound cotton…

“You’re looking at about an increase in price of 15 cents per shirt, looking at the price going from 60 cents last year to $1.20 right now, and a nice knit shirt or woven shirt like this, as far as cotton lint in that shirt, it’ll go up maybe a quarter.”

So don’t panic. It doesn’t take much cotton to make a shirt. I’m Bob French, looking at Brazos Valley agriculture, From The Ground Up.

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