Predictions and Contradictions
March 1, 2012 
I heard a speculator say with cotton, corn and soybean prices fluctuating so wildly, seven out of eight trades will become bad trades. His prediction is pure nonsense. Think about hedgers. I don’t know what the ratio of hedgers versus speculators is, but I’m betting it’s pretty close. Think about how many grain elevators, merchants, etc., are 100% fully hedged. Those trades will not be bad trades in the end. The hedgers, taking long positions in the futures market, will eventually offset them in the cash market. In the end, it’ll be a wash. Boy howdy I’m calling the speculator’s prediction a rather large contradiction.
Last summer, Dr. O. A. Cleveland, professor emeritus at Mississippi State University, said cotton prices would not only reach, but exceed, $1 per pound. O. A. wrote that cotton prices could reach $1.30. After we ran a story on his remarks, we got an irate email saying that we and O. A. had severely affected the cotton market on the negative side. That person said O. A. was only firing from the hip, and we were doing a disservice to our readers by running the story. (“How’s that?” I wondered.) It was only pie in the sky, he said. Boy howdy was that a major contradiction of O. A.’s prediction.
Also last summer, a cotton economist (No, it wasn’t O.A.) said 11.5 million acres of cotton in 2012 was not out of the realm of possibilities. In our
Cotton Grower Acreage Survey, we projected 12.904 million acres to be planted in 2012. The National Cotton Council’s projection calls for 13.628 million acres. But so much can change in a short period of time. Our survey was taken in November; the National Cotton Council’s in mid-December. They say predictions this early are just guesses because there’s not a seed in the ground. Remember, too, that these are planting intentions and won’t become reality until the seed leaves the planter.
Back in 2009, a seed company executive said just prior to the release of the National Council’s projection he’d be happy with anything that started with a 9. He didn’t get his wish. Later on, USDA’s projection called for 8.9 million acres of cotton planted that year. With predictions that close from two credible sources, I won’t call contradictions on either.
So we come to today. I think our 12.9 million acre projection is high, making the Cotton Council’s projection of 13.628 million even higher. I do want our predictions to be low and we become contradictions. I can live with us both being low. Boy howdy can I.
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