“As we look to next year and you make your planting decisions, the U.S. needs more cotton acreage because of the demand for machine-picked cotton," says Ed Jernigan, CEO of Jernigan Global.
John Hart
Cotton prices in 2018-2019 should find support in the 75-cents-per-pound range and will have the potential to move higher, says Ed Jernigan, CEO of Jernigan Global.
“As we look to next year and you make your planting decisions, the U.S. needs more cotton acreage because of the demand for machine-picked cotton. This acreage needs to come from stable production zones that can provide this higher quality cotton,” Jernigan said at the Deltapine NPE (New Product Evaluator) Summit in Savannah Dec. 9.
Jernigan, who has more than 30 years of experience in global supply chain management for cotton textiles and apparel, forecasts global cotton consumption in 2018-2019 will surpass its previous peak in 2006-2007.
Cotton consumption is expanding in China and outside of China. “We look for cotton consumption in China to return to what we call the post peak. It peaked at 50 million bales and then collapsed and we think it will return,” Jernigan said.
Jernigan also believes 2017-2018 ending stocks will be much lower than USDA projects. “If U.S. export sales the rest of this season average 200,000 bales then the U.S. will find itself short of the basis on Oct. 1 and will need new cotton to bridge the gap,” he said.
In addition, Jernigan notes that China’s stocks are down while consumption is expanding there. Stocks outside of China are overestimated with Jernigan pointing to India where he says USDA stocks are overestimated by 6 million to 7 million bales.
“India has been paying above world market cotton prices for 15 months. They’re not going to do that if cotton is sitting in storage somewhere,” Jernigan said.
Source: Sooutheast Farmpress
