Champagne or Beer?
March 4, 2011 Should we start playing “Ruffles and Flourishes?” “Happy Days are Here Again?” “Happy, Happy, Joy, Joy?”
If 2010 was the beginning of cotton’s comeback, then 2011 will be the game-winning, clock-consuming, 99-yard drive we’ve been waiting for four years. We hope. Remember there’s not one stalk of cotton out of the ground, and won’t be until April.
Jordan Lea said in his Economic Update presentation at the Beltwide Cotton Conferences in Atlanta (pg. 12), that the U.S. cotton stocks-to-use ratio is at an all-time low of 9.8%. But he quickly added that the stocks-to-use for corn is at 6%, and soybeans even lower at 5%. A crop failure or disaster anywhere in the world will drive all three so high we might have food riots in other countries … or here at the local Piggly Wiggly.
Lea, CEO of Eastern Trading Company in Greenville, SC, said that his 2011 cotton-planting projection is 12.4 million acres. But Lea said he may be too conservative: “I think it’s too low.” The Cotton Grower survey of growers that was released at Beltwide was slightly higher at 12.475 million. “I think it’s too low,” say I. It became apparent at Beltwide that if — emphasis on if — demand doesn’t unexpectedly deteriorate, 12.8 million acres is a reasonable projection. Did anyone hear 13 million at Beltwide? I sure did.
Assistant/Online Editor Beck Barnes comes at acreage from the point-of-view of state Extension specialists on page 13. They’re pretty excited about acreage potential, too.
Can’t Go Broke Making a Profit
Something else that was emphasized over and over at Beltwide is that there is nothing wrong with selling cotton for over a dollar right now. How many opportunities have we had to do that in the past? A couple in modern times, I guess. You know better than I, but I’d book enough at these prices to at least cover my cost of production. Everything else is gravy. I’m not an economist and without Quicken I’d never be able to balance my checking account, but even I know you can’t go broke making a profit.
Over the next couple of months, things will begin to clear as the National Cotton Council releases its projections in February, with USDA following in March.
I’ll hold off on popping the champagne corks until later, but I wouldn’t be averse to celebrating now with a beer or two.
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