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BELTWIDE: China, U.S. acreage key to price outlook

“The past three times the United States and the world cotton markets got into a mess, the combination of the United States and China pulling back on acreage pushed prices up,” says Mark Lange, vice president, policy analysis and program coordinator for the National Cotton Council.

“Within 12 months of the United States and China cutting acreage, prices rebounded to average levels. It is apparent that China will reduce acreage in 2002, and we expect a significant reduction in U.S. cotton acreage.”

Lange, who was interviewed at the Beltwide Cotton Conference in Atlanta, says most of the cuts will come from the Mid-South as Delta farmers switch “to soybeans. Some Far West acreage will divert to alfalfa and other crops that offer better opportunities than cotton.”

He says acreage in the Southwest likely will remain flat. “Many growers in the Texas Plains, for instance, have no other option.”

A big enough reduction in U.S. and Chinese cotton acreage, he says, will limit production enough to make a market correction. Production could drop to around 17 million bales.

Lange also expects the Southern Hemisphere to cut cotton acreage in 2002. “But it’s hard to get a reading on Brazil.”

Low prices help remove some of the carryover out of market channels.

“At current prices, cotton may make inroads into blends. Four years ago, we saw a lot of 60/40 blends with cotton and polyester. It became hard to find a 100 percent cotton garment. With cotton prices down below polyester, we could see more 100 percent cotton fabric. That would help.”

Lange expects export levels in Mexico and the Caribbean Basin to remain flat for 2002.

He’s also convinced that cotton farmers need a farm bill as soon as possible.

“It is our intent to use every resource of the National Cotton Council to push for passage of a farm bill as early as possible when Congress returns.

“Failure to move quickly will threaten the ability of Congress to deliver the levels of support that were discussed last fall.”

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