In 2011, Reichle says, consumption in China “really dropped off the face of the earth. The rest of the world is consuming as much cotton as ever, but China is the big problem.

“They have a policy right now of buying cotton from their farmers at a futures prices equivalent of more than $1 per pound. But they’re not willing to turn around and sell that cotton to textile mills at a market level price.

“At the same time that they have the highest price for cotton in the world, they have the cheapest man-made fiber price in the world. The trend since the 1950s is of cotton being used less in total fiber consumption; in the last 12 years, cotton has lost almost 10 percentage points in global fiber consumption. That trend accelerated in 2011-13, when China decided to support their cotton at a high price, which made polyester just that much more competitive in the world’s largest textile-producing country.”

Over the last decade, in years when there were 60 million bale carryouts and  stocks-to-use ratios of over 50 percent, cotton prices were cheap, Reichle says.

“In 2009, we got stocks down to 26 million bales with a stocks-to-use ratio for about two years around 20 percent. That was pretty bullish. But in the 2011-13 period, we’ve increased stocks every year, while consumption hasn’t been increasing.

“Since 2010, which represented a very tight period, when cotton truly was worth $1 or more per pound, stocks have massively increased. In 2010, China owned very little of that cotton; everybody else had it. Now, the rest of the world owns less than it did in 2010 when things were tight, and China is Pac-Man, gobbling it all up.

“But China uses only 36 million bales per year, and at the end of the 2013 marketing year they’re projected to have 60 million bales sitting in warehouses, plus they’ll have their own crop coming on top of that.”

Although there’s “a big-time oversupply in China,” Reichle says, “Things aren’t very bearish when we look at stocks outside of China. In the rest of the world, there’s not an excess of cotton. In fact, if we look at 2012-13, it’s the tightest time we’ve seen in recent history outside of China.

“That’s why we have cotton prices at 85 cents per pound instead of 55 cents — we’re trading more on the limited amount of cotton that’s available to the market than stocks that actually exist.”

So, what does it all mean to Mid-South cotton acreage 2014 and beyond, where acreage has dropped like a lead balloon over the last eight years?

“The Mid-South has the lowest acreage this year in a long time — perhaps the lowest ever,” Reichle says. “Georgia has more cotton acres this year than all the Mid-South states combined. We’ve already cut cotton production in the Mid-South by record levels. Will it go lower? A lot depends on grain prices and on what China does?