Worldwide factors boost cotton prices

Cotton prices are flirting with highs not seen in over a decade and more than double what the going rate has been in recent years.

It all comes down to supply, demand and natural disasters around the world.

“It's almost a perfect storm,” observed Kurt Nolte, Yuma County Cooperative Extension director.

The 15-year high follows a chain of events among major Asian and Middle Eastern cotton producers that has choked off global supply even as demand for products made from the fluffy fiber is on the increase.

All this means a windfall for Yuma-area cotton growers, or at least those who weren't locked in to a much lower contract price.

First, a significant freeze and other bad weather in China, the world's largest cotton producer and consumer, damaged crops there and forced that nation to increase its imports to make up for the shortfall.

Meanwhile, India, the second-biggest cotton producer, restricted its exports after suffering flooding and bad weather to protect domestic supplies and prices for its population.

At the same time, Pakistan, another major cotton producer, was hit by devastating floods that had a catastrophic impact on its crop.

And U.S. cotton production has been on the decline for years because of low prices brought about by global competition. That includes Yuma County as well, where the former king of crops had been reduced to about 15,000 acres.

Factor in a growing demand for all things cotton with the rising middle class in China and other developing nations and suddenly the crop is a hot commodity. The price that had been hovering around 40 to 50 cents a pound for years skyrocketed to more than a dollar a pound.

“It's a welcome deal,” said Dwayne Alford, manager of Yuco Gin, one he hopes continues into next year.

At the same time, Yuma-area growers produced an exceptional crop with good quality and high yields this year, he said.

“Decent” yields are about 2-3/4 bales per acre, he said. Last year's yields averaged 2.1 bales per acre. In contrast, growers are getting 3 bales an acre this year.

“Three bales is an exceptional yield,” Alford said, especially in Yuma with its short season.

“It's a great crop ... a good growing season,” he said.

Nolte attributed that to the cooler spring Yuma enjoyed and reduced insect pressure. He said typically in June the area gets a stretch of hot weather just when the cotton flowers are forming and setting bolls, resulting in the loss of flowers and bolls.

“We didn't have that significant heat stress in June so the yields up are significantly over previous years.”

The cooler weather also meant there was less pressure from insects such as whitefly, Nolte said.

In addition, he said, the U.S. Department of Agriculture's program to manage the pink bollworm has been very successful here. He noted that 100 percent of the cotton grown here is engineered to resist the devastating insect. The mandatory plow down dates also have helped.

“It's the best season in five years for quality and yields,” he said. “Plus, global events have mills scrambling to secure cotton. Prices are at historic levels.”

How long this good fortune for cotton growers will last is unclear, Nolte said.

Already, cotton growers in other countries such as Brazil, the world's fifth-largest exporter of the fiber, are planning to increase output next year.

It's likely there will be more cotton acreage in Yuma County as well, especially with wheat and alfalfa prices down.

“I'm hearing talk there will be more cotton next year,” said Clyde Sharp, a grower in eastern Yuma County. “Growers have the opportunity to plant something they know will make them some money if they sell the crop now on contract for next year.”

Sharp said he doesn't know how long the global shortage will last since other cotton-growing countries haven't started harvesting yet.

But for now, he's been able to take advantage of the higher cotton prices, the best he's seen since a short period in 1995. And he's been growing cotton since 1987.

For consumers, though, the news may not be so good.

“I'm hearing that prices of T-shirts and jeans will be going up,” Nolte said.

CNNMoney.com reported in September that consumers may see higher prices for their favorite clothing in stores come January.

“Add $2 to that $12 T-shirt next year,” Ilse Metcheck, president of the California Fashion Association, was quoted saying. Prices could be even higher if businesses factor in higher labor costs overseas, she said.

Alford said that 70 percent or more of U.S. grown cotton is exported as there are few American mills left.

“There's been a little bit of resurge in U.S. mills,” he said. “But mills are where labor is cheap.”

He continued: “Most cotton grown here ends up in China, and it comes back to us as clothing, sheets and towels.”

Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853.