More precisely and importantly, I think a grower needs to build flexibility into his/her marketing decisions.

By this I mean, take a profit when available to reduce some of the exposure to potentially lower prices, but then also leave yourself the opportunity to get a higher price should that happen. That’s flexibility — and whatever form a producer can comfortably achieve that in is just fine.

I’ll admit I don’t know where 2012 cotton prices are headed. No one does.

In 2010-11, few thought cotton would even go to $1 and it ended up at $2. So trying to predict price is a game no one will win.

Likewise, thinking you can pick the top and sell your crop at the top is also a futile attempt.

What is important to understand, however, are the price trends and the events that will impact prices as we move forward.

I see the following 5 factors as major keys to where prices may go:

• World demand;

• Global economic situation;

• U.S. acreage, weather and production;

• Foreign production;

• China 2011 production and building stocks.

Based on these factors, at what time, and combination they occur, prices for the 2012 crop could move above current levels to the $1.05 to $1.10 area or move lower into the 80s.

We’ll not go into all the factors at this point (they’ve been mentioned in previous newsletters) but I will say that World demand (and China more specifically) is crucial.

If world production is down in 2012 (foreign may be down although the U.S. may be up even with less acreage depending on the weather) and if demand improves, the optimistic price scenario is likely. If not, the pessimistic scenario becomes more likely.

I told growers at all 3 big meetings over the past month that if I were a cotton grower, my objective for the 2012 crop would be “to take no less than90 cents on as much of my crop as practical”.

In other words, you don’t want the pessimistic scenario to play out and you be holding the majority of your crop. Likewise, if the optimistic scenario should come about, you want to be in a position to take advantage of that.

Being flexible is the key.

(For previous insights into the cotton market, visit comments Don Shurley made in this article: