Cotton Economist, Dr. John Robinson talks Uncertainties for this years CropFri, 24 Jan 2020 11:22:31 CST
The Red River Crops Conference was held in Altus this week, and Radio Oklahoma Ag Network Farm Director Ron Hays caught up with Dr. John Robinson, Cotton Economist with Texas AgriLife Extension to talk about this year's cotton crop.
Robinson says he has been a little uncertain about having fewer acres this year, "I'm uncertain about that acres question, it's probably the biggest variable in my mind. My target has been changing because relative prices of cotton to feed grains have been changing rather steadily across the whole fall, favoring more and more cotton acres planted. You know four months ago, I thought we were going to have a three and a half million acre cut in acreage. And now, I'm not sure we'll have a cutting in acreage at all, we'll just have to see."
Robinson says that would be pretty significant, and it would affect the ending stocks outcome and the price outcome, "We could be in a very tight situation with prices justified, you know, shooting at 80 cents, If we planted a lot fewer, but if we plant kind of similar to what we've got now, then, basically we could be treading water and just to have prices, kind of in a similar pattern what we saw last year."
With the new trade deal with China in place, Robinson says historically, China used to be our number one customer, " We've lost market share while the Brazilians have picked it up. Now our total number of exports isn't lowered because we were shipping more cotton to other people. But there's some subtle effects of that. I've had merchants tell me that yeah, we're shipping more cotton to Vietnam and Bangladesh and Indonesia. Still, those buyers are more hard-nosed because they know that we've gone through this disruption, that we're making new customers, and new connections, and they're exploiting that by being chincier on their offerings."
Looking ahead through this year, Robinson says his advice for growers would be to have a plan for hedging, " If they're letting a pool sell their cotton, they'll jump in themselves and hedge at higher levels to grab some of the benefit of a price spike. Or if their companies are holding it open till harvest, they'll jump in and hedge at those higher levels. If they're dealing with a merchant, they'll call that merchant and fix a price at those higher levels. But, do it when it happens, and do it when the market is offering you a price that you know is a good price. You may not know if it's going to go higher from there, but you know that the price you're living in today's a good price they need to act on it."
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