• Of the major cotton producing countries in the world, only China had a reduction in cotton production in 2010.
• Acreage increases are expected in all the major cotton producing countries, except for China, in 2011.
• Continued skyrocketing increases in the middle class in Asia are pushing demand for cotton clothes to new highs.
The euphoria over high cotton prices — and the predicted big jump in cotton acreage in the Southeast and throughout the U.S. Cotton Belt in 2011 — isn’t an isolated event. Not by a long stretch.
Of the major cotton producing countries in the world, only China had a reduction in cotton production in 2010. The Chinese, constantly challenged on the issue of fiber versus food, saw a drop in production of 6.25 percent, down to a still world-leading 30 million bales.
While U.S. cotton acreage is expected to jump to near 13 million acres, that’s still more than 2 million acres shy of the record crop in 2006. Similar acreage increases are expected in all the major cotton producing countries, except for China, in 2011.
Continued skyrocketing increases in the middle class in Asia are pushing demand for cotton clothes to new highs. Subsequently, textile production is up around the world, including the U.S. The demand for cotton and cotton products is increasing in China and India, which have two of the fastest rising economic indexes in the world.
High production, increased acreage and soaring demand, combined with record high input costs around the world, creates astounding volatility in the cotton world. However, high prices worldwide, seem to be creating a euphoria over cotton from seed to fabric that has put the threat of low cotton prices to the backseat for the time being.
In 2008, worldwide cotton production was 24.3 million metric tons. Production dropped to 23 million tons in 2009 and rebounded last year to 26.1 million metric tons. However, in all three years the world used more cotton than was produced (24.8 million tons in 2008, 26.8 million tons in both 2009 and 2010).
Jordan Lee, president of the U.S. Cotton Shippers Association says, halfway through the USDA marketing year over 97 percent of the 2010 U.S. cotton crop is already sold.
Back in November there was a 40 cent per pound drop in cotton prices, but no corresponding drop in futures prices. Clearly, demand is driving this market, Lee says.