What is in this article?:
- Cotton faces global stock growth, uncertain markets in 2012
- China card
- As the cotton industry looks to 2012, Adams says U.S. planted area will be a key issue.
- He says the NCC annual planting intentions survey indicates acreage across the U.S. Cotton Belt will decline by 7.5 percent.
- China's stocks policy could also play a key role in future prices.
As U.S. cotton farmers make plans for 2012, they face a significantly different set of economic factors than they did a year ago.
“Cotton prices were on their way up (last year),” says Gary Adams, vice president, economic and policy analysis, National Cotton Council. He says markets last winter were buoyed by concerns that supplies would not be adequate to meet mill demands.
Adams, interviewed at the NCC annual meeting in Fort Worth, Texas, said the current market shows “concern about global supplies. Coming off the 2011 harvest we have a larger world crop. We’re still seeing global demand suffer from the uncertainty in the global economy, and we’re still seeing some of the aftermath of the very high prices we saw in the spring of 2011 that put a lot of stress on textile mills.”
Pressure on mills
He says the financial pressure on mills, combined with concern over the general economy has resulted in weak demand over the past few months. “That’s leading to a recovery in global stocks.”
As the industry looks to 2012, Adams says the U.S. cotton area will be a key issue. He says the NCC annual planting intentions survey indicates acreage across the U.S. Cotton Belt will decline by 7.5 percent. “That’s consistent with the market prices being down relative to where they were last year and in relation to competing crop prices.”
Despite the decline in cotton market offerings, futures market prices are still holding around 90 cents a pound, “still historically good prices.”
China policy also will affect the economic outlook for cotton. “The Chinese government has been active in replenishing their national reserves of cotton. Over the last few months they have purchased between 11 million and 12 million bales. So they have certainly created some short-term support in the market.