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The Source: Why China Matters To Texas Cotton Growers

Mike Beauregard http://bit.ly/1IFEZ3q
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In 2011, the price of cotton doubled, sending the commodity on a roller-coaster ride and hitting a 150-year high, not seen since the American Civil War, when it reached more than $2 a pound.

Global superpower, China, is also a textile superpower, and the price shock, paired with flooding in cotton-producing parts of the country, had a major impact on policy. For this reason, China began buying up large amounts of cotton to hold in reserve, a strategic cotton reserve, if you will. 

According to John Robinson, an agricultural economist at Texas A&M University, China currently holds around 50 million bales of cotton--bales weighing 480 lbs a piece. He will be the first to admit that the actual amount is unknown and unadvertised by Chinese officials.

Last week,realizing the fear of many cotton growers, China announced they were going to release some of their strategic stock into the market, depressing a price less than a third what it was in 2011, and at  5-year low earlier in the year. 

cotton glut descended on the market, with prices feeling downward pressure already from bumper crops in India and Lubbock, TX. 

What are Texas Cotton growers feeling? How will consumers react? 

Guests:

  • John Robinson, extension economist and associate professor at Texas A&M University
  • Steve Verett, Executive Vice President at Plains Cotton Growers, inc. in Lubbock, TX
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Paul Flahive can be reached at Paul@tpr.org