January 21, 2000

If you’re holding on to old crop cotton thinking better prices are on the horizon, think again.

That’s the advice William B. Dunavant, Jr., head of Dunavant Enterprises, gave the industry Jan. 5 at the 2000 Beltwide Cotton Conferences in San Antonio.

"I would certainly continue to market my current cotton crop, with the POP, at today’s level," he advised. "I don’t see any reason to hold onto the current crop. Certain qualities may be tight in the spring, but I would not hold for fear of lower prices."

Ample worldwide cotton supplies continue to depress prices, despite a recent upswing in cotton consumption and usage by the global textile industry.

"I do not see any factors that would push prices five to six cents higher than current levels," Dunavant said.

Dunavant also raised a caution flag as producers start thinking about marketing their new crop cotton.

"I wouldn’t hedge a bale of new-crop cotton with December futures contracts trading at 55 cents per pound. But if the market takes a long position and pushes December above 60 cents, I would take a long, hard look at hedging, probably through options," he advised. "Still, spring planting is a long way off. I would be cautious about hedging until we have a clearer picture of the U.S. and world supply picture for 2000."

However, Dunavant said producers should consider buying December puts to hedge downside price potential as spring approaches.