Iowa Public Television

 

Host of Factors Cause Low Cotton Prices

posted on July 6, 2001


Although there were only four days of trading sessions this week, most of the contracts for grains and oilseeds rallied on forecasts of dry hot weather. That factor, however, failed to boost fiber prices.

Indeed, the cotton market seems to underscore the adage that it's darkest just before it gets really dark. The trade in fiber seems nearly oblivious to the forces that normally move prices higher.

This week, the usual suspects of blame for the morose market were joined by a couple of new explanations.

 

Host of Factors Cause Low Cotton Prices

The cotton industry has been hit by record production levels and decreased worldwide demand. These factors, among others, have contributed to cotton futures prices plummeting to 15-year lows.

With the price paid for cotton waning, and the cost of production increasing, cotton farmers have gone high tech. This year, two-thirds of the 16 million acres devoted to cotton were expected to be planted in genetically engineered varieties.

Unfortunately, adding to producer problems, has been a shorter cotton fiber length. Longer cotton fiber lengths mean finer quality threads. Finer threads mean more money in everyone's pocket at the end of the day.

Futures contracts specify that cotton fiber must be at least one and one-sixteenth inches long but the current crop has fallen short. Some cotton merchants have placed the blame on genetically engineered varieties. But officials at the National Cotton Council of America place the blame squarely on decreased rainfall and not the laboratory.

 


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