ACSA’s Lea: Lots to Like About Cotton Prices
January 5, 2011 For the first time in years, the National Cotton Council allowed a merchant to deliver the keynote 2011 address on the cotton market at the Beltwide Cotton Conferences, which are being held this week in Atlanta. Jordan Lea, President of the American Cotton Shippers Association, did not disappoint.
Lea set the tone for this year’s event by examining the factors that have contributed to cotton’s current booming market. His conclusions reflected the overall feeling of this year’s Conferences. Cotton, Lea said, is in great shape.
“Gary Adams mentioned that this was the first time we’ve ever had anybody address the Beltwide while cotton was at $1.40. I don’t think any of us imagined we’d ever get to do that,” said Lea. “There’s cause for continued optimism relative to cotton prices.”
Lea went on to outline the factors that provide optimism for sustaining the current high price of cotton. The crop’s fundamentals seem to indicate that high prices will remain for the foreseeable future. Most notably, Lea said, the current crop is gone.
“With eight months to go in the marketing year, 96% of this crop is sold. (There are) 18.3 million bales and 17.6 million are sold. The crop is gone,” Lea said.
Demand is driving the current market, Lea said, and a major factor in that demand is that over half of the world’s population now lives in countries with robust economies.
Lea said cotton stocks are so low that it would take dramatic shifts in both world supply and world demand to have a negative affect on cotton’s booming market.
“Barring any unforeseen major, dramatic world circumstance, we’re not going to see that any time soon,” Lea said.
In giving marketing advice to cotton producers, Lea advised growers to not ignore 2012 prices, which have already breached .90 cents. Lea also encouraged growers to develop a marketing plan and to stick to it.
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