Is cotton opportunity germinating under our feet?
Did President Trump’s hardball tactics on trade with China prompt the action, and did Lawton and southwest Oklahoma area cotton farmers get a gift from China? Maybe so.
Last week, China said last week it would purchase $70 billion agriculture, manufacturing and energy products if President Trump would cancel $50 billion in tariffs on steel, aluminum and 1,300 imported Chinese products.
Trump wants China to reduce the $375 billion in U.S. merchandise trade deficit with China by $200 billion by 2020.
Several days later, the Wall Street Journal reported that after years of stockpiling imported American cotton, China is again a big customer of U.S. cotton producers. China’s strategic cotton reserves are likely to run low by the end of August, according to analysts.
Have you planted yet? This is the time. Are you waiting for a rain that is needed for additional soil moisture? Pray for Mother Nature’s support. A good crop could give a big boost to southwest Oklahoma’s economy.
The business newspaper reported that China has contracts for more than 361,000 bales of U.S. cotton for 2019-20, according to U.S. Department of Agriculture numbers.
“That’s enough to make 400 million T-shirts,” reporter Julie Wernau wrote. “China has never booked that much cotton that far in advance at this time of year, in data going back to 1998.”
The Chinese are paying nearly 18,000 yuan a ton up from just under 15,000 yuan a year ago. Translated, the futures price for July cotton as of the close on Tuesday was 95 cents per pound, based on an average 460 pound bale, and that is up from just over 70 cents a year ago.
The fiber is used in apparel, textiles and upholstery.
Pushing the price up, the newspaper reported, are poor growing conditions in Texas. Of course, it could all be changed by weather and, of course, politics.
Another issue for cotton farmers is the Bipartisan Budget Act of 2018, which authorized changes to seed cotton as a covered commodity that require farmers to act on their generic base acres. Beginning with the crop planted this year, seed cotton is a covered commodity just as other crops and eligible for either Price Loss Coverage, or PLC, or Agricultural Risk Coverage, or ARC, Texas A&M AgriLife, Amarillo, reports.
It’s time to look at the risks and rewards of expanding King Cotton production in southwest Oklahoma.
— The Lawton Constitution