Cotton harvesters are rolling across southern Oklahoma. On this weekend’s edition of SUNUP, Oklahoma State University Grain Marketing Specialist Kim Anderson discusses cotton prices. Currently cash prices in the Altus area are around 61-62 cents. Futures prices are ranging from 63 to 65 cents. Anderson said these price levels are squeezing the farmer.
“They’re probably covering the variable cost of production, but they’re not covering the total cost of production,” Anderson said. “That means they can produce a couple years at these levels. They are going to have to keep those belts tightened, but over time they’ve got to cover that total cost of production to stay in business.”
Global cotton prices are relatively low right now. Anderson said that’s because of high production and ending stocks. U.S. production this year is estimated at 13.3 million bales. That’s lower than the average of 16 million bales. He said world production this year has been estimated at 107.4 million bales. That’s well below the average of 121 million bales. Anderson said prices are being held down by the global ending stocks of 107 million. That’s well above the average of 86 million bales. With excess cotton globally, it’s going to take some time before prices can move higher.
“These low prices are going to reduce world cotton production over the next couple of years,” Anderson said. “As production goes down, stocks will go down and the price will go back up.”
A similar situation exists for wheat after three record world crops in a row. With lower prices, Anderson said this next year wheat acres will go down, plus less inputs will be utilized by farmers in order to reduce costs. As wheat production goes down, stocks will decrease, then wheat prices can go up.
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