The cotton futures market jumped limit up during Tuesday’s trading session with December cotton trading above 90 cents.
Cotton has been on a steady climb since last October following harvest and quality challenges. Since mid-May, the prices have spiked nearly 11 cents per pound. Last week, the cotton adjusted world price it its highest mark since 2012.
However, weather is playing a role in the price action due to scorching temperatures and lack of rain in the southern Plains.
“The north Texas problem is the crux of the issue here,” said John Payne, author of This Week In Grain. “Forecasts will be continually hot with no rainfall in sight. A lot of folks we talk to up in that area are simply going to abandon the dry land production for this year given the outlook that doesn’t make sense to put it in the ground.”
This comes during a time when growers in the Southeast are battling through soggy fields.
“I don’t even know when we will get back in the fields. I’ve heard everything from [rain tallying] five inches around my area of rain up to 10 plus inches in other areas,” said Michael Hancock, a farmer from Doerun, Georgia.
Strong demand in the face of steady to lower world production is helping prop up prices. Analysts say China is selling off some reserves which props up price as well.
“Internationally, cotton futures soared to limit up [Monday] night,” said Ashley Arrington, founder of AgriAuthority. “We know China has a large reserve of cotton and they put out a certain amount that they are going to sell. The last four auctions have gone very well and have been sell outs. [It’s] propping up the idea even further of the great global demand for quality cotton.”
AgDay national reporter Betsy Jibben continues her talk with Ashley Arrington, founder of AgriAuthority; Lloyd Arther, a farmer from Crosby County, Texas; John Payne, author of This Week In Grain; and Michael Hancock of Doerun, Georgia.