‘Certainly Disheartening:’ Decrease in Cotton Futures Could Affect Local Crops
West Texas cotton grower Doug Hlavaty says cotton futures are essential for farmers to plan when to sell and what to plant in their next crop. “This year the prices started out 20 cents higher than they are right now. Last year at this time December’s futures were around a dollar, that was December 12, December 13 cotton futures are around 76 cents, so see it’s quite a bit different from last year,” said the farmer who tends to irrigated and non-irrigated fields 12 miles south of Lubbock.
This year’s price wouldn’t seem so low if there hadn’t been a recent spike in prices. National average prices for the last two years have been in the 80-90 cent range.
“In the 60s to 70s cents range is still pretty good, but compared to where we’ve been for the last couple years it’s certainly disheartening,” said Darren Hudson, a professor in the department of agricultural and applied economics and director of the Texas Tech Cotton Economics Research Institute. Low cotton futures are partially due to shifts in supply and demand, and partially due to fears the United States will go over the fiscal cliff, he said.
“Part of it has to do with sort of the confidence that investors in the market at this point,” Hudson said. “We’re staring at pretty substantial tax increases and government expenditure decreases, which is going to have a huge impact on interest rates, market behavior – things like that.”
With cotton prices low and grain prices high, Hudson said the South Plains may see 10 to 15 percent fewer acres of cotton next year. “We’re forecasting a move away from cotton this year and certainly in those areas out there,” he said. “Out here we’re probably going to lose some acres to grain sorghum because those markets are looking pretty good.”
Reporting by Michaela MacDonald
CONTACT: Darren Hudson, director, Cotton Economics Research Institute, Texas Tech University, (806) 742-2864 or email@example.com
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