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Dollar cotton -- a rare place in history

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As this harvest season winds down, the stars seemed to have aligned in a somewhat producer-friendly constellation. Reports from the field indicate that yields in the Mid-South are good, although there are increasing concerns about high micronaire.

There’s only one thing better for Mid-South cotton producers than respectable yields and good harvest weather – all that, plus dollar cotton.

Dollar cotton hasn’t happened many times over the last 150 years.

It happened for the first time in 1864, during the Civil War. Southern farmers were urged to shift from cotton to food production to help feed the Confederate Army. Cotton production dropped from 4.5 million bales annually in 1861 to a measly 300,000 bales in 1864, and prices shot up to a dollar. (I’ve seen historical records indicating prices of between 96 cents and $1.41).

On the other hand, what little cotton available was often subject to blockade by Union Troops, so if you were fortunate to have some cotton, you didn’t have a way to get it delivered. It’s like getting a date with the best-looking girl in town, and then the bridge washes out on your way to the dance.

In 1995, cotton reached a dollar when ending stocks plunged below 3 million bales. Several experts projected that cotton had reached a new price plateau. But it was not to be. Four years later, cotton prices were below 50 cents a pound.

As this harvest season winds down, the stars seemed to have aligned in a somewhat producer-friendly constellation. Reports from the field indicate that yields in the Mid-South are good, although there are increasing concerns about high micronaire.

Weather during the harvest season has been very favorable. Many farmers I’ve spoken to say this is the earliest they’ve ever started a harvest. If this good fortune continues, it should give them a jump on ground preparation for next season.

And then there’s dollar cotton, at harvest time no less, adding even more sunshine to a rapidly progressing harvest.

While dollar cotton is newsworthy, I’m not sure there’s much grower cotton left to be sold at a dollar, although many growers did price cotton at very nice profit levels of 75 cents and higher. Not a bad looking prom date either.

The long-term outlook suggests there is still some upside left in the market what with tight stocks and extremely strong export sales (over a million bales in a two week period in September).

But temper that with the fact that dollar cotton is rarefied air. Market analyst O.A. Cleveland points out that it’s happened only a handful of times in the history of trading. And most of the time, it’s been brief.

“Cotton, corn, wheat and corn are nothing but commodities,” Cleveland said. “When prices get this high everybody is going to grow it. We will get this in balance, and prices will come back down.”

 If you have some cotton to sell, and cotton prices are still hanging around a dollar, Cleveland suggests taking some action. “You don’t have to price every single bale you have left, but price all but four or five.”

  

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