Although futures prices for the coming season's cotton crop declined 20 percent during the first quarter of 2001 and averaged below last year's level for the same period, Johnson said cotton still remains an attractive alternative to other crops.

"The continued attraction to cotton in 2001 is because of several factors," Johnson said. "These include the lack of profitable alternatives, high energy and fertilizing costs limiting corn acreage, the appeal of the cotton insurance program and the benefits of the marketing loan program.

"These factors have combined to keep the area in cotton production even though the ending stocks for the 2000-2001 marketing year are projected to climb to 5 million bales - the highest since the 1988 season."

Futures prices for December 2001 cotton averaged at about 58 cents per pound during the period from January through March this year, but they also showed a decline of 15 cents per pound during that period. Those average prices also were 3 cents below last year's level.

But Johnson said the relative price ratios still favor cotton.

"During January through March, the corn-to-cotton price ratio averaged 4 to 1 compared with 4 to zero one year ago," Johnson said, adding, "And the soybean-to-cotton ratio averaged 8 to 1, compared with 8 to 7 in 2000."

The prices are affected by lower disappearance and sharply higher ending stocks, which characterized the U.S. Department of Agriculture's cotton supply and demand report for April, Johnson said. Since production and imports were unchanged, the result was no change in total supply, he said.

"Domestic mill use is reduced 200,000 bales to 9.5 million based on recent months' consumption data and continuing indications of slowing growth in consumer demand," Johnson said of the USDA projections. "U.S. exports are reduced 100,000 bales, and recent export sales have not met expectations even though export volume has been strong.

"Prospects for strong late-season exports will likely be limited by sluggish foreign demand and the large production forecast for the southern hemisphere countries."