Cotton prices reach all-time high in United States

Cotton prices in the United States have risen to a historic high in the last two decades amid ongoing drought in the central parts of the country.

The plant fiber reached $1.3171 per pound (about 453 grams) on the key US futures contract, the highest since July 2011.

Rainfall has been exceptionally low since early January in the northwest part of Texas — which produces about 40 percent of all US cotton production.

Depending on the region in the United States, cotton is planted from March to June, so there is uncertainty in the market about size of this year’s crop, according to John Robinson, a professor at Texas A&M University and cotton specialist.

Many are already comparing the current weather conditions to 2011 when US cotton producers experienced their worst drought ever and prices rose as high as $2.27 per pound.

The drought this time is hitting an already tight market because of a pandemic-related increase in demand for cotton textiles as people spend more time at home.

In addition, there has been a demand increase in China, by far the world’s largest producer and importer.

Another reason is the increase in the prices of pesticides.

While high cotton prices were expected to lead to a sharp increase in US acreage, the cost of pesticides is expected to limit that growth, Arlan Suderman of broker StoneX told the local PBS station in Iowa.

Added to that is a wave of speculative buying, driven by accelerating prices, Robinson said.