The world cotton situation includes stable consumption and excessive supplies. As a result, prices are expected to remain weak for another year. December ‘00 futures may range between 58 and 45 cents per pound.

Production in the U.S. will likely exceed total use and increase carryover beyond 5 million bales by the end of next season. However, projections indicate fewer acres in foreign cotton for the new crop. With more cotton in the U.S. and less in foreign countries, the CotLook "A" Index may increase relative to the U.S. futures price. The result of fewer foreign stocks and higher price could be a lowering of the loan deficiency payments (LDP). If the "A" Index increases to the mid-fifty cent range and December ‘00 futures decreases to the 50-cent level, the total producer price for cotton (market price plus LDP) would be near the 52-cent loan rate and much less than in the 1999 harvest season.

Producer marketing plans for the new crop need to include pricing strategies, like buying puts, forward contracting, or other alternatives, that place a floor under the cash price. Seasonal forces and adverse weather conditions could support modest price rallies this spring.