Cotton Crop Prospects

Our tenant's cotton fields, both the Pima (extra-long staple) cotton and the Acala (upland) cotton, started out with poor stands. The growing conditions have been nearly ideal since May, so the fields should be able to provide about as much fiber and seed yields as possible, given the sparse stands. As usual at this time of the year, our tenant really is uncertain of exactly how things will go with the cotton. The prices of the two types of cotton remain stuck at low levels, despite the price action in other agricultural commodities.

Due to the low prices, high costs, and lack of water, California's production of cotton of any kind continues to decline. Acala cotton is nearly gone. We have read that the major producers of Pima cotton have informed the mill buyers that without considerably higher prices next year, the farmers will simply not be able to continue growing Pima cotton in California. The mills are unwilling to improve their offers. This should lead to some interesting discussions this winter.

Alfalfa in the Future?

Despite its ubiquity throughout California's San Joaquin Valley, our tenant has never grown alfalfa. There has never been any particular reason for this, other than the fact that our tenant has concentrated on his program of growing cotton and wheat in rotation. But with the high prices available for alfalfa and the low prices available for cotton of any kind, our tenant is being forced to reconsider his planting options. Alfalfa may very well be part of the future on our land.

Financial Crisis

What effect will the current financial crisis, which provides us with so much entertainment value on the news and business cable TV channels, have on our tenant? So far, the answer appears to be: very little. The costs of fuel and fertilizer have decreased somewhat, as have the prices for his agricultural commodities. It is possible that there will be some difficulty in securing credit to finance next year's production, but it's far too early to know much about that.

Robert Sturgeon
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rsturge@inreach.com
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