USA: Cotton outlook strong, industry's leaders say

Enduring a rough patch marked by rain-spoiled crops, a trade war with Brazil and prices uncompetitive with other crops, U.S. cotton seems poised to be "stronger and more prepared for the future," an industry leader said Monday.

National Cotton Council chairman Jay Hardwick gave the optimistic outlook as he closed the industry group's annual meeting Monday morning at The Peabody.

Nearly 850 producers, ginners, warehousers and merchants attended the meeting, council officials said.

Sen. Blanche Lincoln, D-Ark., chairman of the Senate Agriculture Committee, was scheduled to give the meeting's keynote address, but her appearance was canceled because of inclement weather.

Weather certainly dominated talk about Mid-South cotton production as fall rains caused some $750 million in overall crop damage last year in Arkansas, Mississippi and Tennessee.

But Marianna, Ark., producer and 2008 National Cotton Council chairman Larry McClendon is looking ahead. He said cotton farmers can expect some new weed resistance issues and insect problems in 2010. But outside of ordinary production challenges, he was optimistic about cotton industry economics.

Government subsidies for grain -- mainly corn for ethanol -- increased corn prices. Farmers responded by switching from cotton and many other crops to corn, which put cotton-industry infrastructure like gins and warehouses in a slump.

"This temporarily distorted all (agriculture) markets, but market forces are coming into play and some of these imbalances are getting corrected," McClendon said, noting cotton prices should be competitive with corn this year.

The cotton industry is also expecting word this month from the World Trade Organization on the award Brazil will receive to settle alleged cotton market losses due to U.S. agriculture programs. In August, a WTO panel awarded Brazil nearly $294 million for the alleged losses. However, Brazil is expected to ask for more than $800 million.

"The Cotton Council issued a statement at the time expressing astonishment that anyone could conclude that U.S. cotton production could damage Brazil's cotton interest," Hardwick told council members Monday.

Also, McClendon noted a "burdensome" U.S. supply of 8 million to 10 million bales of cotton has slowly whittled away to about 4 million bales. Also, he said, the worldwide demand for cotton is returning after the recession.

"All of these are reasons for optimism," McClendon said. "The numbers are coming together in cotton."

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