Depressed US Textile Industry Means Tough Times and Marketing Challenges For Cotton Farmers. Delta Apparel, Westpoint Stevens, Russell, Cone Mills, Thomaston Mills, Pillowtex, Dan River, Avondale ..... these are all names have been in the news lately. Each of these cotton mills and/or manufacturers has reported low earnings, job layoffs, and/or closings. Since 1997, US textile mill business has declined by approximately 2 ½ million bales or over 20%.

Much of the blame has been placed on the strong value of the US dollar which makes US made products more expensive to foreign buyers and makes foreign products cheaper to the US. Total US consumption of cotton has trended upward and continues to increase but the problem is that the increase has come from imported products not US made products.

This places US cotton farmers in a precarious and painful position. With prices for all alternative crops depressed as well, cotton acreage remains high despite low cotton prices. Unless there is a supply short fall due to low yields or unless exports are at record levels, the potential for surplus (and accompanying low prices) will continue.

2001 cotton prices (December futures) have recently tried to set a floor near the 40-cent level. Temporarily, this may be an optimistic sign. Fundamentally, at some price someone (speculators, mills, merchants, producers) will step up to the plate and begin to take "long" positions, buy Calls, or buy actual cotton at these low prices. When this begins to happen the market will gain support. For the time being, producers can only watch and hope for rallies. Baring a significant 10-15 cent increase, it looks like most cotton will go into harvest time unpriced and uncommitted. A 16-20 cent POP is likely in the making but what to do with the actual cotton will be a critical decision. (Don Shurley)

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