Cotton prices are on the rise topping a dollar per pound

Cotton, once known as King Cotton in the Delta, is making its way up in the market arena with prices topping a dollar a pound.

“This is only the second time in my 19 years with Staplcotn that cotton prices have gone over a dollar,” John Chrestman,  cotton specialist, said Wednesday. The only other time Chrestman watched prices top a dollar a pound was in 1996.
As of press time Wednesday, cotton prices stood at $1.20.5 per pound.
Chrestman said cotton prices began moving upward last fall and have not let up since.
Prices hit a low of 60 cents in 2009.

“Prices have doubled since then,” Chrestman said.
Chrestman works with Staplcotn members in an 80-mile radius of Clarksdale including Bolivar, Coahoma, Desoto, Panola, Quitman, Tate and Tunica counties.
Chrestman said Staplcotn handles over 90 percent of the cotton grown in Tunica County and 70 percent of the cotton raised in Coahoma County.
“Our members in my area span from Walls in Tunica County to Boyle just below Cleveland,” Chrestman said. He anticipates 110,000 acres will be planted to cotton this fall in his region.

“I handled 212,000 acres in 2005 – the most ever,” Chrestman said. The lowest year came in 2009 when he handled 66,000 acres.
Chrestman is allowed to lock in 100 percent of the acres under production in his region on the call option. A call option is when a farmer prices his own level in the futures market.
The Catch 22 is that farmers who book their cotton and fall short of the contracted amount at harvest time have to buy back the difference usually at a much higher price.
The outlook calls for a 25-30 percent increase in planted acres over 2010 in Chrestman’s region.

Chrestman explained how the market works.
“When Staplcotn sends $100 million to the New York Stock Exchange the company must keep $25 million in reserve capital for margin calls,” Chrestman said.
In July Chrestman can begin booking 2012 crop cotton.
Staplcotn has members in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Missouri, Tennessee and North and South Carolina.
Cotton farming in Mississippi began in 1822 when Ben Smith bought 30,000 acres four miles north of Lake Washington in Washington County. Cotton farming in Coahoma County began in 1831 when the King & Anderson Plantation took shape.
Staplcotn was founded by Oscar Bledsoe, the company’s first president, in Greenwood, which has remained its corporate headquarters. The first recorded association meeting was held on May 25, 1921, in Greenwood.
Chrestman said Staplcotn grew out of a train ride to Memphis by Bledsoe who had determined that the existing marketing system was costing him more money than it should have.
The 1919 harvest season bore out his suspicions.
“Bledsoe began exploring alternative ways to market his cotton,” Chrestman said. He hired Aaron Shapiro, a California businessman, to help him create the organization.”

(Source: http://pressregister.com/articles/2011/03/18/news/doc4d825dcb8c555132341636.txt)