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Not since the Civil War era, says O. A. Cleveland, have the stars been so favorably aligned for cotton. And, the veteran cotton analyst contends, that long-dreamed-of $1 price is likely to be around for some time — perhaps as far out as 2014.
Not since the Civil War era, says O. A. Cleveland, have the stars been so favorably aligned for cotton.
And, the veteran cotton analyst contends, that long-dreamed-of $1 price is likely to be around for some time — perhaps as far out as 2014 — thanks to an almost empty pipeline and burgeoning demand, particularly in China.
“It’s not going back to 65 cents to 85 cents,” Cleveland, Mississippi State University economics professor emeritus, said at the winter commodity conference of the Mississippi Farm Bureau Federation. “I’ll carry it out to 2013-2014 pushing $1 per pound.
“My projection for cotton this year is for a range between $1.05 and $2,” he said. “Not a single one of you believe me — but then you never have” [much audience laughter].
Two dollars for old crop cotton isn’t likely, he acknowledged … but, a big question mark is China, which has exhausted its cotton reserves. “If that situation remains stable and we see a squeeze in certificated stocks, it’s not outside the realm of possibility.”
The cotton market has traded at the limit for 33 of the past 54 trading days [as of Jan. 20], he notes. “In my lifetime, I’ve never seen that. It’s absolutely unbelievable.”
Cotton is up 100 percent over the last six months, Cleveland says, and up 150 percent over the past 18 months. “Cotton is on the same price ride that we saw begin for grains back in 2006-2007 and which is continuing today.”
In fact, he says, the foundation for the red hot action in the commodities market in recent years can trace back to a monumental political decision by Russia four decades ago. “The current high prices for cotton are directly related to the Russian wheat export situation that occurred in the 1970s.” And, he says, it is reflected in similar political actions in recent years by China and India.