The marketers concur anything is possible since cotton prices are impacted by many volatile factors. Weather, acreage competition, cotton consumption, polyester use, stocks on hand, global acreage competition, higher oil prices, and economic worries can shift cotton prices higher or lower.

Neeper says about 100 million cotton bales were produced worldwide during the 2009 crop year while actual cotton use (consumption) totaled about 113 million bales. World ending stocks declined precipitously – down 27 percent over the previous crop year.

In the 2010 crop year, global cotton production fell short again. China, the world’s largest cotton producer, yielded 29.5 million bales versus an expected 33 million bales. Flooding reduced Pakistan’s expected 11 million bale crop to 8.7 million bales.

Meanwhile, the crop in India totaled 25 million bales amid 27 to 28 million bale expectations. The final U.S. cotton tally of 18.1 million bales was down from 19 to 19.5 million bale projections.

“As a result, prices started out the marketing year (Aug. 1, 2010) at about 80 cents a pound. Just before the March 2011 contract went into the delivery period the price peaked at least synthetically at around $2.36 per pound,” Neeper said.

For now, the worldwide cotton “panic” appears over and prices are lower. The question is - have higher prices permanently “scarred” the demand for cotton, Neeper asked.

“It may have scarred the demand, but cotton supplies are still tight around the world,” Neeper said. “U.S. ending stocks this year are estimated at about 42 million bales; that’s 2.5 million bales lower than this time a year ago.”

Higher oil prices also threaten cotton consumption. Neeper said, “Oil prices are taking discretionary spending away from consumers who are trying to feed their families; they are not buying t-shirts.”

Looking to 2011-2012, Neeper believes worldwide cotton production will total about 126 million bales. The U.S. bale tally could reach 19 million, up 900,000 bales. About half of the U.S. cotton acreage is located in Texas where an ongoing severe drought could reduce production.

At best, Neeper estimates China could produce 31.5 million bales, up 2 million bales. In Pakistan, higher sugarcane prices are steering some growers away from cotton. He pegs Pakistani cotton production at up to 11 million bales, compared to 8.7 million bales a year earlier.

The crop in India could reach 27 million bales. Regions and countries with smaller cotton acreages - West Africa, Syria, Greece, and Central Asia – combined could produce 4 million additional bales in 2011.

The top issue driving cotton this year, Chilton says, is weather.

“West Texas (in late April) is dry with wind blowing at 50 miles per hour and 90 degrees every day,” Chilton said. “The North China Plain is behind on moisture. It’s important to remember that cotton production in the U.S., China and India is primarily rain-fed.

If growers do not achieve the expected crop this year, or cotton demand unexpectedly increases or some combination thereof, Neeper says cotton prices could reach $1.60 to $1.70/pound.