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Virginia growers eye cotton with caution

Virginia growers eye cotton with caution

• The recent explosion of crude oil prices is sending the price of fuel for tractors, fertilizers and pesticides skyrocketing. And if input costs go too high, even record cotton prices won’t return a profit.

Cotton prices have been sky-high for several months, breaking records. And that’s not thrilling some cotton producers in southeastern Virginia, where cotton made a comeback two decades ago.

"People who haven’t planted cotton in the past are looking to get into it. Some who have been out for a few years are looking to get back in," said Gary Cross, a cotton, soybean, peanut and wheat grower in Southampton County and vice-chairman of the Virginia Farm Bureau Federation Cotton Advisory Committee. "So everyone’s assessing their operation to see if there’s anywhere that cotton would be the best, most profitable fit."

But Virginia farmers aren’t sharing in those record prices, which have been above $2 a pound for the raw product for several weeks. The typical Virginia cotton producer locked in a profitable price of 65 to 70 cents a pound last year, and most have already forward-contracted this year’s crop at much lower prices than what’s trading on the New York Mercantile Exchange.

"I don’t know of anybody that has even traded cotton at $2 a pound," Cross said. "The mills aren’t even buying cotton at that price, because they can’t make money at it. Cross said he’s not sure where the price inflation is coming from, "but we would prefer it not be at $2. We like to see the market down at a more realistic area, and keep everybody on a more stable, flat playing field."

Cotton prices began climbing last year as the world economy improved and exports increased, particularly to China and the Far East. Virginia farmers watched closely and increased cotton plantings in 2010, but drought dashed hopes of a big year.

"We had one of the worst years on record for rainfall," Cross said. "I had less than three inches of rain from the time I planted my cotton crop until I picked it. Had we had favorable weather, we probably would have been able to sell some more cotton at a favorable price."

With the boom in full swing, the National Agricultural Statistics Service is predicting Virginia cotton acreage will increase 27 percent this year from 2010, to an estimated 105,000 acres.

But even with record high prices and strong demand, Cross and other growers remain cautious. The recent explosion of crude oil prices is sending the price of fuel for their tractors and fertilizers and pesticides skyrocketing as well. And if input costs go too high, even record cotton prices won’t make him a profit, he said.

"None of my cotton is sold here in Southampton County," Cross said. "It’s sold to mills all across the country and all across the world. So what happens in the Middle East with oil, and countries changing governments will affect everybody, including the farmer."

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