is part of the Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

  • American Agriculturist
  • Beef Producer
  • Corn and Soybean Digest
  • Dakota Farmer
  • Delta Farm Press
  • Farm Futures
  • Farm Industry news
  • Indiana Prairie Farmer
  • Kansas Farmer
  • Michigan Farmer
  • Missouri Ruralist
  • Nebraska Farmer
  • Ohio Farmer
  • Prairie Farmer
  • Southeast Farm Press
  • Southwest Farm Press
  • The Farmer
  • Wallaces Farmer
  • Western Farm Press
  • Western Farmer Stockman
  • Wisconsin Agriculturist

Big West Texas cotton playing key role in commodity marketplace

While China's continual presence in the cotton industry continues to dominate analysts' conversations, one respected entrepreneur's economic assessment of the crop paid nearly equal attention to another region: West Texas.

Speaking at the Ag Update Seminar during the Mid-South Farm and Gin Show, William Dunavant, retired C.E.O. of Dunavant Enterprises, Memphis, Tenn., said cotton production in West Texas is indirectly impacting the Mid-South's share of the marketplace.

“Can you believe in Texas they are producing 8.3 million bales? And it's high quality cotton,” Dunavant said. “It's also cheaper than cotton from California, Arizona, the Memphis area and Australia.

“Texas is taking a big part of the market.”

Dunavant said this year 66 percent of West Texas cotton was rated grades 11 and 21. China, he added, is using this cotton and using it in “high volume.”

“It's definitely taking market share from us in the Memphis territory and other states.”

Dunavant said weather conditions, however, are poising to contrast West Texas cotton from this year's copious crop with the next season ahead.

“Last year I said that there was adequate moisture in West Texas to produce a big crop. Unfortunately, I was correct. We had big moisture and it produced a huge crop. But today, in South Texas and in West Texas, the moisture content is very, very dry. They need rain.”

Dunavant added that his company's long-range weatherman forecasts no major precipitation for that region for another 45 days.

Another topic in West Texas Dunavant addressed concerns cotton in the USDA loan program, which the Farm Service Agency, he said, had previously permitted to be stored outdoors while that area's warehouses remain at full capacity levels. In recent days, however, Dunavant said he was informed that the FSA is mandating that those outside bales be moved into warehouses by April 1 (with a grace period of 15 days).

“As a Mid-South or Southeastern cotton grower, you should be unhappy about this,” he told the audience. “It works to your disadvantage. There is ample storage space in the country for this crop, though it's not in Texas.”

Dunavant said what would be a reversal in governmental regulations means that “these West Texas warehouses trying to ship cotton are getting behind everyday, and so this is going to be even more congestion.”

Dunavant Enterprises' economists forecasted the United States to produce about 19 million bales of cotton in each of the past two years, and the nation produced 23 million-plus bales.

“The situation would seem to be more normal next year due to the lack of moisture in West Texas,” Dunavant predicted.

He foresees world production next year growing from 113.2 million bales to 118 million bales and world consumption growing to 123 million bales.

He said China would produce 26.2 million bales of cotton this year, while Chinese cotton consumption will expand from this year's approximately 45.5 million bales to 49 million bales next. Next year, he said, China will also import 18.5 million bales.

“It's just hard to identify with this amount of enhancement with consumption, and more is on the way,” he said.

Other foreign nations, besides China that Dunavant said should play a significant role in the world market for cotton include India, Pakistan, Turkey, Australia, Bangladesh and Vietnam. Uzbekistan, he noted, once a prosperous cotton trader, has sharply dropped from the U.S. market due to political tensions created by that country's current president.

Dunavant said overall, “things are continuing to light up and speed up in world production and consumption.”

He said due to China's impact in the market, the price range in May for cotton could be about 54 cents on the downside and as high as 58 cents on the upside.

“Any major surprises next year could stimulate prices to a considerable higher level in the market. I'm not predicting that, I'm just saying that all of us need to monitor production in the world.”

Dunavant said the government's Step 2 payment program, scheduled to end in early July due to the World Trade Organization's ruling in favor of a case brought by Brazil, would put a financial strain on domestic cotton producers.

“It's going to be fascinating next year to watch our cotton try to regain competitive status without Step 2. But we will do it, I am confidant, we will just have to make some adjustments,” he said.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.