They didn’t grow much cotton where Joe O’Neill was raised. But there have likely been hundreds of thousands of yards of cotton fabric flow through the New York City garment district only a short distance from where he grew up and still calls home.

And as long-time senior official with the former New York Cotton Exchange, and later the New York Board of Trade, this city slicker has always woven a close relationship with those who grow his favorite commodity.

O’Neill began working at the cotton exchange in 1970 after attending Manhattan College. He knew the cotton futures contract inside and out and served as president and CEO of the exchange from 1984 through 1998.

In 1998 the exchange merged with NYBOT, where he served as senior vice president before retiring in 2007. He was responsible for all aspects of cotton and other products traded, including trade relations, marketing, research and development, making sure contracts kept pace with changing industry products and the development of new products.

Retirement didn’t get him too far from the trading floor in New York’s financial district.

When NYBOT merged with ICE in 2007, he became chairman of the ICE cotton committee which oversees the cotton futures contract. He replaced Don Conlin, a long-time friend of O’Neill and the industry who died in 2007.

“The committee discusses how the contract is performing and recommends changes that the committee thinks will help the contract perform better,” says O’Neill. “We also deal with situations as they arise, such as how to deal with the warehouses and the cotton that was damaged by Hurricane Ike.”

O’Neill has seen the futures contract switch from 100 percent cotton pit open outcry trading to nearly all electronic trading.

“About the only thing that has stayed the same since I joined the exchange and now is that the farmers produce the cotton,” he says.

“Trading is now electronic. And a major, if not the most important tool for the industry for hedging, is now options, which did not exist when I started.

“The industry itself is very different. While we still have co-ops and merchants, their look has changed. Co-ops and merchants have had to adjust their marketing. When I started, the United States sold to the U.S. mills. Now the U.S. mills share of the market has decreased dramatically.

“We were a supplier of last resort to the rest of the world. Now, they are by far our primary market.”

Low prices lead to higher prices and the reverse? That’s a theory O’Neill has always taken to heart. But has that changed in today’s highly volatile market?

“While I still think this is true, I think this refers mostly to supply,” he says. “High prices cause an increase in production and low prices cause a reduction in supply. I think cotton’s low prices will result in a reduction in supply, especially since a lot of its competing crops now look like they provide a greater return.

“With that said, you would expect higher prices next crop year, but the only adjustment to the timetable might be the demand. If the current economic downturn lasts longer than I hope, the timetable of ‘low prices cause high prices’ might take longer than usual.”

What about a marketing strategy with cotton prices at below loan? In the past, prices at that level often saw O’Neill recommend that growers sell their cotton at harvest and buy call options.

“At these price levels and the high volatility, it probably is a good time to be on the sidelines,” he suggests. But he will have new marketing strategies in mind as the planting season arrives.

Remembering 9/11, O’Neill has seen the best of times and worst of times at the exchange offices. When terrorists attacked the World Trade Center, the NYBOT lost seven exchange members as they were preparing for the day’s trading session.

“It was a terrible day for everyone here and across America,” says O’Neill, who was on a cotton trade mission in India when the Twin Towers fell.

Even though NYBOT’s main World Trade Center facilities were destroyed, it had auxiliary facilities in place and began trading the Monday following the 9/11 catastrophe.

Like the rebound seen after the attacks and the years to follow, O’Neill sees agriculture and the cotton industry getting over the recent slump that followed dynamic prices all in the same year.

“The cotton industry is a very resilient industry and will recover and successfully adapt during these trying times,” he says.