Cotton prices right now are the highest in history. Prices for other Georgia-grown row crops are riding high, too. And the ride could last well into next year, say University of Georgia farm economists.
Cotton prices for the 2010 crop are currently around $1.20 per pound, the highest ever in 134 years of records, said Don Shurley, a UGA Cooperative Extension cotton economist.
Commodity economics can be complicated. But the simple reasons why cotton prices skyrocketed are because:
• World cotton acreage decreased over the last three years, reducing production.
• There is uncertainty in the status of the 2010 crops in China, India and Pakistan.
• Economic recovery has increased global demand for cotton-made items.
“The demand side is growing very well, and the supply side has yet to catch up with it. So, that really set the stage for higher prices, the supply-and-demand situation that has developed over the last several years,” Shurley said.
Cotton harvest started several weeks ago in Georgia and will end later this fall. But most farmers won’t get the record prices for this year’s crop, he said. Current prices are what farmers could get if they sold their cotton now. Farmers typically contract cotton in the winter or spring before the crop is planted. At that time this year, prices were 40 cents to 45 cents per pound lower than they are now.
“We can talk about a $1 (per pound) cotton, but it’s a moot point really as far as most producers are concerned because they’ve already sold their crop,” he said.
Cotton prices will likely go down for next year’s crop. But a pound of cotton should still sell for 85 cents to 90 cents, he said. These are still good prices.
Farmers are harvesting soybeans and peanuts now, too. Corn harvest ended during summer. Prices for these other major Georgia commodities are looking good next year. Such an across-the-board outlook is rare, said Nathan Smith, a UGA Extension agricultural economist.
Georgia and other Southeastern farmers can produce a wide range of crops, unlike Midwest farmers who typically grow only one or two crops in a year. Georgia farmers can decide more freely what and how much they plant, he said.
“This year is looking at competition between the major crops grown in Georgia, in terms of peanuts, corn, soybean and cotton, where all the prices are going to be higher than they’ve been in the last two seasons,” Smith said.
Peanut prices next year may reach $500 per ton, $50 more per ton than this year. Corn could jump as high as $5.25 a bushel, $1 per bushel more than this year. Soybeans could reach $11 per bushel, $2 per bushel more than this year, he said.
Though prices next year look good, the cost to make the crops doesn’t, Smith said. Energy prices will climb. Seed costs will be higher. Fertilizer will be 10 percent to 15 percent higher next year, too. And weather, as is always the case, must cooperate to make a crop.