Cotton Market in Tumble

Southeast Farm Press reports that cotton prices began plummeting on May 10, the day the USDA May supply/demand numbers were released.

Prices (Dec. 12 futures) have dropped 18% — from just over 83 cents on May 9 — to just under 69 cents on Wednesday of last week.

Prices have thus far attempted to stop the bleeding twice. The first attempt around 75 cents was unsuccessful. The second attempt is around 70 cents — where we are right now.

USDA monthly supply/demand revisions for previous years and carried forward, increased estimated world stocks. USDA’s May report contained the first projections for the 2012-13 crop marketing year. This report added another 7 million bales to projected World stocks by this time next year.

Demand for the 2012 crop year is expected to improve to 110 million bales, but production is expected to still out-strip that by 7 million bales — thus the projected increase in 2012-13 stocks.

Don Shurley with the University of Georgia says, “if prices remain this low into the 2013 crop year, we’ll see a big reduction in cotton acres in 2013 if corn, soybean and peanut prices remain relatively more attractive. We saw this in 2007 through 2010. If prices remain at these levels into 2013, it will also be an interesting first year test of what will be the new farm bill safety net.”