Cotton prices worry farmers: China trade dispute depresses demand

Posted 10/23/19

Wilson County farmers have the potential to have larger than usual cotton yields in their fields. But a 25% drop in cotton prices means they will struggle to break even.

“Yields are above …

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Cotton prices worry farmers: China trade dispute depresses demand

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Wilson County farmers have the potential to have larger than usual cotton yields in their fields. But a 25% drop in cotton prices means they will struggle to break even.

“Yields are above average, I think,” said Scott Sullivan of Lucama-based Sullivan Farms, who has picked almost half of his cotton crop.

“I’m really concerned with the price,” Sullivan said.

When Wilson County farmers planted cotton earlier this year, the price was more than 80 cents a pound. That has dropped to just above 60 cents a pound.

When the price was high, many farmers decided to plant more cotton.

Jerome Vick of Vick Family Farms was one of them.

“It looked like at the time all people were thinking that cotton prices were going to be pretty good,” Vick said. “It did dip into the 50s a little bit. Fortunately it has recovered a little bit into the 60s. It cost $700 an acre to plant cotton.”

Even if an acre can produce 1,000 pounds of cotton, that’s still not enough to break even.

“That’s only $600,” Vick said. “You lose $100 an acre with a 1,000-pound yield.”

Vick tells a story that crystallizes the poor price for cotton.

In August 1957, Vick’s wife was on the front page of The Wilson Daily Times.

“I have that newspaper. I looked up the price of cotton that day. It was 33 cents a pound. A brand-new cotton dress at Barshay’s, which was a pretty good women’s store, was $9.65. My wife said that same dress today would cost you close to $100,” Vick said. “So that means that the dress price has gone up 10 times. That means that the cotton price should be $3.30 had it kept up with the price of that dress. That’s where we have been since 1957. The price was 33 cents and now we are only double that price. We should be 10 times that price.”

Vick said cotton prices are affected by many factors, but one of the biggest historically is that many of the fabric-producing mills have gone to petroleum-based products that better lend themselves to the high-speed spinning equipment now in the mills. The most recent hit on prices is from a trade dispute between the U.S. and China.

Wilson County farmers planted about 10,000 acres of cotton in 2019, which is up from the 8,331 acres planted in 2018.

Donald Smith is manager of the Silver Lake Growers Cotton Gin, which processes cotton from Wilson and Nash counties plus several other counties in eastern North Carolina.

“We had a good planting this year. We have as much as we have had in the last several years planted, but once it was planted and this trade agreement went south, the price dropped from the 80s down to as low as 58 cents, so consequently they had planted and they are not happy with the price whatsoever, but it’s in the field and they’ve got to market it,” Smith said. “If in fact this price does not turn around, I would dare say that there won’t be any cotton planted next year in this area. It’s just that serious. They cannot plant cotton in the 60-cent range.”

Warm weather and timely rains have produced a good crop for cotton farmers, with some acres having the potential of producing more than two bales an acre. A bale of cotton weighs 500 pounds. An average cotton crop would be 850 pounds per acre.

“It’s going to take China coming in and buying a substantial million bales of cotton for this thing to turn around. Right now, China’s not buying anything. If China gets back in the game, we could see these prices move back upward,” Smith said.

“It absolutely concerns me. You can’t function. This is a business and it takes cotton to make this business thrive and if we don’t have cotton, there’s a likelihood that they could shut the doors on the building.”

Smith said he and farmers are just hoping for a trade agreement.

“This money that is being handed out is not enough to substantiate these farmers,” Smith said. “They need the crop. They need the price. The bank needs assurance that they are going to be able to make it work out on paper first. If you not able to work it out on paper, it’s not likely that you are going to be able to work it out in the field.”

Farmers say the high yield is good news, but it’s not enough to make up for the low price.

“It takes almost three bales of cotton to break even and a three-bale yield is almost unheard of,” Vick said. “I heard Trump say that the farmers are going to have to buy more tractors and buy more land and all to meet the demand. Don’t worry about any of that. If you will put the price up, farmers will do it. If the price lends itself to profitability, then they will do it. You don’t have to worry about how they are going to do it. Put the price up there and turn them loose. The main thing is don’t ever give up. We may have to park these cotton pickers for a little while, but we not going to give up.”