Staplcotn expecting less cotton next year due weak prices
Published: December 27,2011
ACROSS MISSISSIPPI — Although Mississippi’s cotton acreage rebounded somewhat in 2011, Staplcotn’s Hank Reichle is expecting Delta farmers to plant less of the fiber in 2012 in response to lower prices.
Reichle, vice president of export sales for the Greenwood-based cotton-marketing cooperative, said farmers are not glued to any one crop.
“Producers have diversified. They have a lot of infrastructure costs into all these crops. They are going to try to keep a rotation within their farm that includes all of them.
“Based on prices, they will tweak it one way or the other,” he said.
Last spring, as Mississippi farmers were making decisions about their 2011 plantings, cotton prices were running between $1 and $1.30 per pound for the new crop, Reichle said.
That led farmers to put 600,000 acres in cotton, double from two years earlier but still less than half of the 2006 crop. They, though, weren’t the only ones who decided to shift some grain acreage back to cotton.
Acreage went up around the world and yields were generally more favorable, creating an increased supply, said Reichle. Meanwhile, demand fell as textile mills moved toward less expensive fibers.
As a result, cotton prices have fallen steadily in the meantime. The price for the 2012 crop was trading this week at about 85 cents per pound.
Last year, Reichle said, “the market had to go up, otherwise we were going to run out of cotton. It had to slow demand down. This year the market is going back down trying to stimulate demand again.”
Pricing is a self-correcting mechanism in the commodities markets, he said.
“High prices always cure high prices, and low prices always cure low prices. I think the high prices are being cured right now, and hopefully the low prices will come and be gone before we know it.”
Staplcotn draws members from all the cotton-producing states east of Texas, 11 in all. Georgia, now second to Texas overall in cotton production, is Staplcotn’s largest producing state.
The cooperative, though, has been able to maintain more than 50 percent of the market share of the Mississippi crop.
“Mississippi is still a big piece of the cotton business,” Reichle said.
It ranked fourth in production in 2011.
This year, Staplcotn will market an estimated 2.5 million bales. Half will be sold to domestic mills, the other half to foreign mills. China is its largest customer, followed by Turkey and Mexico.
Asia is the “world’s growth engine right now,” impacting not just cotton consumption but the demand for all kinds of products and services, Reichle said.
China, he said, “has 1.4 billion people. A few of them buying something new is a lot of something.”
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