The surge in cotton prices to unprecedented levels this year may take longer to correct than the rally in corn or soybeans, as US farmers who abandoned the crop years ago are slow to return. Cotton plantings in the world's biggest exporter are set to jump nearly 20 percent to just above 13.2 million acres this spring, according to a Reuters survey.
But that would still rank well below the biggest area ever planted in cotton. Few expect cotton sowings to ever again even approach the 15.27 million acres in 2006, which was a five year high. Though cotton prices have ascended to their highest levels relative to soybeans since the mid-1990s, many farmers are now reluctant to return.
"People sold all their cotton pickers," says John Bondurant, a farmer who plants some cotton in the Arkansas and Mississippi area. Some who converted to soybeans - the main competition to cotton - are unlikely to switch back, preferring to harvest a less demanding crop. "You have to work on cotton all season long. It's a high maintenance crop," said Jim Nunn, a cotton merchant in Tennessee.
The reticence to increase plantings threatens to maintain support for prices that have tripled from levels near 70 US cents a lb in July 2010 to a record over $2.20 a lb this month, straining margins for apparel companies such as Levi Strauss, which raised prices on some products due to higher costs of raw materials.
SOLD THE GIN Farmers in the US Southeast and Delta states got rid of their cotton pickers and spindles, opting to buy combines so they could go into the grains business. Scores of farmers who switched to planting soybeans while cotton values languished in 2007 cannot simply go back to cotton now that it is trading over $2 a lb, analysts said.
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