Keeping Up with Cotton’s Prices
August 4, 2009 Every time I think I have it figured out, I figure out I don’t.
Just a couple of weeks ago, the ICE December 2009 contract was hovering around 65 cents per pound. At planting, it was 46 cents. Is there any wonder we saw another acreage bomb?
After the crop was in the ground, I started paying more attention to ICE December 2010. Over that same two-week period, it hit 72 cents. And CBOT November of 2010 soybeans had dropped to $850. With a basis of $1, that’s $7.50 soybeans. (I wish no ill to soybean growers. Soybeans have played a huge role in my life.) Here we go, I said. Cotton is about to buy back some acreage.
Uh … well, you know … I figured wrong …
Cotton dropped back to 65 cents and soybeans zoomed to $10 on the board, amounting to a booking price for 2010 of about $8.75. Cotton for December of 2010 has rallied back to just over 69 cents. And for your sake, I’m staying away from any predictions for where it’s headed.
But I will say this: There is some bullish sentiment building from people who, by comparison, drive a Bentley while I ride a tricycle with one wheel missing. China is pulling out of the world recession faster than the rest of the world, which should increase demand. If that continues, some suggest a one-million-acre increase next year. I buy that. One has gone so far as to say two million. I hope that.
Nevertheless, what we saw the past two weeks will be seen many, many times between now and planting-decision time. It’s going to be a bumpy ride for soybeans and cotton and fundamentals could change daily. Last man standing in March wins.
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