Cotton prices have been in the doldrums for the last several years, and there was no reason to think they would rise this year. But they did.
The biggest price hikes typically occur in June, and by July the prices are usually set, Black Oak Gin Company Manager Cheryl Luther told Talk Business and Politics. But, this July prices did edge slightly up, bringing a bit of relief to cotton farmers in the Mississippi Delta Region.
“It was unexpected for sure,” Luther said. “It’s a nice movement in the market before the harvest.”
Cotton is paid by the pound. Numerous factors determine how much a cotton farmer gets per pound including the contract they signed in the spring, whether it’s fixed or mobile, the quality of their cotton, subsidies, and others. Farmers getting the high end payoff were projected to get anywhere from 72-cents to 78-cents per pound, according to estimates, while farmers on the lower end were expected to get 63-cents to 65-cents per pound. Those estimates have grown by 5 to 6-cents across the board in the last month, Luther said.
Why the prices have risen isn’t exactly known, but those in the business have theories, she said. Many trade publications have stated that cotton crops in India and Pakistan will not be as good as projected. China has a lot of cotton in storage, but the country isn’t expected to release as much as previously thought, Luther said.
Weather conditions in northern Texas have been erratic, and the crop there may not be as good as estimated in the spring, she said.
Craighead County was set to have a much stronger cotton crop this year no matter what. Craighead County farmers planted about 30,000 acres of cotton last year, and about 210,000 acres of cotton were planted statewide, according to numbers from the University of Arkansas Division of Agriculture.
Official numbers have not been tabulated, but the statewide number is expected to balloon to 370,000 acres this year, and Craighead County farmers may have planted up to 45,000 acres of cotton this spring, Craighead County Extension Agent Branon Thiesse told Talk Business and Politics.
Lower soybean prices, slightly better incentives, and other factors drove the cotton acreage up, he said. Cotton and other crops got off to a later start in this part of the state because of a wet spring, but the cotton crop is strong, he said.
“It’s looking real good right now,” he said. “Things are progressing on schedule. This warm weather has really helped in the pollinating process.”
The Black Oak Gin is owned by 17 cotton farmers in the Craighead County area. Gins offer incentives, such as cotton seed rebates, to entice farmers to use a particular gin. Those programs help, but nothing replaces better prices, Luther said.
“If they (farmers) make more money on their cotton, the better we all do,” she said. “It’s pretty simple.”