Decrease in Cotton Futures Could Affect Local Crops
By: Michaela MacDonald
Updated: November 12, 2012
Cotton grower Doug Hlavaty says cotton futures are essential for farmers to plan when to sell and what to plant in their next crop.
"This year the prices started out 20 cents higher than they are right now. Last year at this time December's futures were around a dollar, that was December 12, December 13 cotton futures are around 76 cents so see its quite a bit difference from last year," said Hlavaty.
Hlavaty says this year's price wouldn't seem so low if there hadn't been a recent spike in prices. National average prices for the last two years have been in the 80-90 cent range.
"In the 60s to 70s cents range is still pretty good, but compared to where we have been for the last couple years it's certainly disheartening," said Darren Hudson, who teaches agricultural economics at Texas Tech.
He says low cotton futures are partially due to shifts in supply and demand, and partially due to fears the United States will go over the fiscal cliff.
"Part of it has to do with sort of the confidence that investors in the market at this point. We are staring at pretty substantial tax increases and government expenditure decreases, which is going to have a huge impact on interest rates, market behavior, things like that," said Hudson.
With cotton prices low and grain prices high, Hudson says the South Plains may see 10-15% fewer acres of cotton next year.
Hudson said, "We are forecasting a move away from cotton this year and certainly in those areas out there. Out here we are probably going to lose some acres to grain sorghum because those markets are looking pretty good."
"With the grain prices as high as they are I think everybody is going to be looking at growing some grain. There may not be as much cotton in this area next year," said Hlavaty.
