LUBBOCK, Texas (KCBD) – Local market experts say the current cotton market is depressed due to falling prices for the crop. He said this could affect the future of South Plains producers.
Darren Hudson is the Larry Combest Agricultural Competitiveness Endowed Chair at Texas Tech University. He said cotton prices reached his contract high of 82 cents a few months ago and were trading in the mid-70s in late November.
“So it’s down significantly from before, but it’s stable at this point,” Hudson said.
Historically, Hudson said the mid-’70s were a good time for cotton, but producers were experiencing high input costs and the prices weren’t enough.
“If you look at the futures price of 77 cents, the local spot price is probably around 72 cents, and the local spot price of 72 cents is below the cost of production,” Hudson said.
He added that futures prices could cause headaches for the 2024 crop as farmers plan what’s best for them.
“So when we start making decisions about planting next spring, we have to think about what the potential crop value is going to be. The insurance price is determined by the futures price,” Hudson said.
That means further losses will be even more severe for South Plains producers in the mid-70s.
“So if the crop goes down again next summer, it’s going to be worth even less,” Hudson said.
He added that this is the rock bottom for prices. Therefore, it is a cause for concern.
“So, given the input costs, to this extent, this is a cause for concern about future profitability,” Hudson said.
Hudson said the market is currently depressed due to concerns about global cotton demand. As for when those prices will rise again, he said it won’t happen until demand increases.
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