Late last fall at the end of the cotton harvest, an odd thing happened. Cotton prices began to go up and stayed up and early this year it looked like producers could break even on their cotton price for the first time in quite a while. Experts began advising cotton farmers to try and lock in prices on at least part of their 2018 crop. John Robinson is a Professor and Texas A&M Agrilife Extension Cotton Marketing Specialist.
“And then the next strange thing that happened was that prices continued to go up and here recently going back about two or three weeks, quite unexpectedly by me I might add, the price just vaulted over eighty cents and then it kind of stabilized and then it literally vaulted over ninety cents and we find ourselves trading in the low nineties right now which is a dang profitable price again if you know you have bales to sell which is always the million dollar question.”
Robinson says he has theories about why prices went up.
“There’s a lot of speculative money in New York that’s pumped into the market, gone into commodities markets, raised the prices of a lot of things. And that speculative money can come and go according to the news and the whims of the fund managers that are doing that. So no, it may not hang around. All we know I what the market is offering us today.”
Robinson says that while growing costs have been between seventy and eighty cents per pound, since 2014 cotton farmers have been getting between fifty-five and sixty-five cents per pound.
“And that’s not enough. So that means they carry over their loans from last year. These folks borrow hundreds of thousands of dollars. They have huge amounts invested in equipment dedicated to cotton and then something like Harvey can come in and ruin the quality and they get a ten cent discount in price and all of the sudden they can’t pay back their loans. It’s a very tough business. And my hat’s off to them for their stomach lining to be able to handle it. So this year here’s an opportunity, the market’s offering higher prices. Do we know if they'll continue? I have no idea so I’m again kind of motivated in my preaching to say consider doing something with some portion of your expected production.”
The drought of 2011 and the Hurricane of 2017 reminds farmers of what can happen to expected production.