Cotton prices have been breaking records for the past couple of months, but that not thrilling some farmers in southeastern Virginia, according to Southeast Farm Press.
“People who haven’t planted cotton in the past are looking to get into it. Some who have been out for a few years are looking to get back in,” said Gary Cross, vice-chairman of the Virginia Farm Bureau Federation Cotton Advisory Committee. “So everyone’s assessing their operation to see if there’s anywhere that cotton would be the best, most profitable fit.”
However, Virginia farmers aren’t sharing in the current record prices, which have been above $2 a pound for the raw product for several weeks.
The typical Virginia cotton producer locked in a profitable price of 65 to 70 cents a pound last year, and most have already forward-contracted this year’s crop at much lower prices than what’s trading on the New York Mercantile Exchange, according to Southeast Farm Press.
“I don’t know of anybody that has even traded cotton at $2 a pound,” Cross said. “The mills aren’t even buying cotton at that price, because they can’t make money at it.
Cross said he’s not sure where the price inflation is coming from, “but we would prefer it not be at $2. We like to see the market down at a more realistic area, and keep everybody on a more stable, flat playing field.”
Cotton prices began climbing last year as the world economy improved and exports increased, particularly to China and the Far East. Virginia farmers watched closely and increased cotton plantings, but drought dashed hopes of a big year, the publication reported.
“We had one of the worst years on record for rainfall,” Cross said. “I had less than three inches of rain from the time I planted my cotton crop until I picked it. Had we had favorable weather, we probably would have been able to sell some more cotton at a favorable price.”
For 2011, the National Agricultural Statistics Service is predicting Virginia cotton acreage will increase 27 percent this year, to an estimated 105,000 acres.
But even with record high prices and strong demand, Cross and other growers remain cautious. The recent explosion of crude oil prices is sending the price of fuel for their tractors and fertilizers and pesticides skyrocketing.
If input costs go too high, even record cotton prices won’t allow farmers to make a profit.
“None of my cotton is sold here in Southampton County,” Cross said. “It’s sold to mills all across the country and all across the world. So what happens in the Middle East with oil, and countries changing governments will affect everybody, including the farmer.”