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Strong Exports Helping Drive Higher Cotton Prices

By Julia Rodriguez, University of Georgia

 

Georgia growers can expect to make at least 5 to 6 cents more per pound of cotton than they received this time last year, according to Don Shurley, University of Georgia Cooperative Extension cotton economist.

The price is due to many factors, but the main cause is the increase in exports.

“Most of our cotton now is exported – about three-fourths of it is going overseas,” Shurley said. “Our exports are doing really well. U.S. quality, especially here in the Southeast, has been just excellent in recent years.”

Shurley has been with UGA Extension for more than 26 years and believes that this year represents the best quality of cotton Georgia has produced in that time. Much of that improved quality is attributed to newer varieties and technology associated with those varieties.

However, some of the past year’s yield potential was lost due to the late-season drought. The lack of rain prevented some of the yield at the top of the plants from fully developing.

But because of the extended drought, growers were able to get into the fields and harvest the crop in a timely manner.

“We didn’t have any rain or wind come in and reduce the quality, so the harvest conditions were really, really good,” Shurley said.

Additionally, cotton acreage was up last year. Georgia planted 1.18 million acres, compared to 1.17 million acres in 2015, according to the UGA Farm Gate Value Report. This year, however, Shurley projects the acreage in Georgia may decrease due to estimated high peanut prices.

“Peanuts are expected to be pretty high-priced this year, so farmers will be tempted to plant more than they did this past year,” Shurley said. “The increased peanut acreage could cut into the amount of Georgia’s cotton acreage.”

As for cotton seed, Shurley is still trying to calculate the data and average them together. However, he hasn’t seen an increase in the price of seed or technology fees in recent years. The differences in prices from year to year result from the different varieties of cotton seed combined with newer technology, Shurley said.

“For example, if you wanted to go to the store and buy a loaf of bread, that loaf of bread may cost you ‘X’ dollars,” explained Shurley. “If you went back the next year and that loaf of bread was more expensive, you could easily conclude that prices have gone up. However, if the bread is more expensive, but it’s a different type of bread, then you’re not comparing the same thing, just like we’re not comparing the same varieties of cotton and technologies.”

Prices may be higher next year, but it would be because a new variety or new technology has been introduced to the market, not because of an overall price increase determined by dealers and seed manufacturers.

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