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Producer Prices Received and Mill Prices Paid for Quality in Southwest Cotton: Similarities and Differences

Darren Hudson, Don Ethridge, Changping Chen


Quality premiums and discounts at the mill and producer pricing points were compared for similarities and differences. Results showed that premiums and discounts were similar for staple length, but differed substantially for micronaire and strength. One possible reason for these differences may be the existence of the loan schedule. Loan quality premiums and discounts were compared to the two pricing points, and the findings indicated that the loan did not reflect market values for the quality attributes. Additionally, the Daily Spot Cotton Quotations, from which the loan is adjusted every year, did not reflect market values either. Thus, these sources of quality premium and discount information may be distorting market pricing signals in the market.

Reprinted from Proceedings of the 1996 Beltwide Cotton Conferences pp. 437 - 440
©National Cotton Council, Memphis TN

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Document last modified Sunday, Dec 6 1998