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How Much Does the Market Fear Stickiness? Evidence from the 1996 Crop Year

Kevin Hoelscher and Don Ethridge


 
ABSTRACT

Several factors converged during the 1995 growing season, resulting in high, uncharacteristic levels of stickiness in the 1995 West Texas cotton crop. As a result, textile mills experienced losses in time and production as well as increased costs in the face of this situation. Some 1995 crop cotton was sold the next year in the 1996/97 market. It was observed that this cotton was selling at a discount to the 1996 crop. For cotton with the same HVI quality attributes, 1995 crop cotton was being discounted by an average of approximately 3 cents/lb. It was concluded that mills and buyers, aware of the sticky problems experienced with the 1995 crop, were wary of this cotton and were discounting it in the 1996/97 market based on the threat of potential stickiness and their fear of this threat.



Reprinted from Proceedings of the 1998 Beltwide Cotton Conferences pp. 331 - 334
©National Cotton Council, Memphis TN

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Document last modified Sunday, Dec 6 1998