In 40 years as an economist, Don Shurley, professor emeritus in the Department of Agricultural and Applied Economics at the University of Georgia Tifton campus, has never seen markets react the way they have to the ongoing coronavirus pandemic.
The coronavirus’ impact on cotton prices is unprecedented and scary for what this season might hold for farmers in the Southeast.
Shurley wrote in Cotton Grower that over the past 4 to 6 weeks, prices have declined almost 30%, due mostly to coronavirus impacts. May 20 futures also dipped below 50 cents.
“I have received numerous calls and emails recently from growers still holding significant portions of last year’s crop. It is very unusual to see this magnitude and proportional decline in price post-harvest,” Shurley said. “It’s not unusual for price to decrease rather than increase while storing the crop. But with this magnitude of a drop – and here we are soon to plant another crop – the options are limited, and none of them win a beauty contest.”
The coronavirus pandemic has certainly had a negative impact on demand and may only get worse with the recent USDA Prospective Plantings report. There were 13.74 million acres of cotton planted last year, and this year’s projections have cotton acreage at 13.7 million acres.
In Georgia, acreage is expected to drop slightly from 1.4 million to 1.3 million. In Alabama, acreage is expected to decrease from 540,000 to 530,000. And in Florida, acreage is expected to increase from 112,000 to 120,000.
The expected acreage is in contrast to what most observers were predicting, according to Shurley. Most observers/analysts were expecting a 5% to 10% reduction in acres due to low prices.
For full story, see Cotton Grower.