Record cotton prices eluding many Virginia growers
• A lot of Virginia producers are unable to take advantage of the high prices, because they’d already booked their production at lower prices last winter,"• Some Virginia growers do have extra cotton above what they’ve already contracted to sell. But others aren’t harvesting enough to even fulfill their contracts.
November 3, 2010
Cotton prices have reached record highs in recent weeks, bringing a smile to the faces of some Virginia cotton growers. But not everyone is able to take advantage of this year’s windfall.
"It’s history-making, no doubt," said M.L. Everett Jr., a Southampton County cotton grower and chairman of the Virginia Farm Bureau Federation Cotton Advisory Committee. "We saw prices hit $1.30 per pound for December cotton deliveries this week. We’ve never seen that. I booked 100 bales at $1.26 a pound myself.
"But a lot of our producers are unable to take advantage of them this year because they’d already booked their production at lower prices last winter," Everett explained. "Plus we’re seeing major drought losses this year. Some farmers are not even getting a bale per acre."
Some Virginia growers do have extra cotton above what they’ve already contracted to sell, Everett said. But others aren’t harvesting enough to even fulfill their contracts. A bale of cotton weighs about 480 pounds, and Everett said a conservative estimate for an average per-acre yield is one bale. While cotton futures prices reached $1.30 a pound the week of Oct. 25, they were at 75 cents a pound in late July and as low as 30 cents a pound in 2002.
"Cotton more than any crop is a worldwide commodity," said Spencer Neale, a VFBF commodity marketing specialist. "The stocks got very low worldwide, economies are turning around and China’s economy is still fairly decent. So we’ve got low supplies and growing demand, a classic scenario. But two years from now, who knows?"
Some clothing manufacturers and retailers are already saying high cotton prices could soon lead to higher clothing prices, but Everett said the cotton grower shouldn’t be blamed.
"It’s just like the example of a loaf of bread and how much a farmer gets from the wheat that’s used to bake it," he said. "A cotton farmer gets less than a dollar for the cotton that’s included in a dress shirt that could cost a consumer $45."
The state’s cotton harvest was three-quarters complete as of Oct. 25. According to the Oct. 25 crop weather report from the U.S. Department of Agriculture, 43 percent of Virginia’s cotton crop is rated in fair to good condition. The USDA crop forecast predicts Virginia cotton yields will average 673 pounds an acre. Growers are expected to harvest 82,000 acres this year, up 19,000 acres from 2009.
The top four cotton-producing localities in Virginia in 2008, the most recent year for which statistics are available, were Southampton, Isle of Wight and Greensville counties and the city of Suffolk. Cotton was the state’s fifth-largest field crop that year, with 60,000 acres harvested.
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