We’re trying to raise $200,000 by tomorrow! Help us reach our goal.
TEXT OF STORY
BILL RADKE: When we do the numbers on this show we always mention the stock markets. We don’t often give the price of commodities like cotton.
But as Marketplace’s Jeremy Hobson reports, cotton closed above a dollar a pound this week.
That’s its highest price in 15 years.
JEREMY HOBSON: Cotton prices are up not because of anything happening here in the U.S., but because of bad weather in two of the largest cotton-producing countries — China and Pakistan.
SHARON JOHNSON: When I get up in the morning, the first thing I do is look at Indian weather, China weather, then I look at U.S. weather.
Sharon Johnson is a cotton analyst with First Capitol Group in Atlanta. She says back in November of 2008…
JOHNSON: Prices got below 40 cents as the worst of the recession hit, and here we are less than two years and we’ve nearly tripled in price.
She says we’re also seeing some of the highest demand ever for cotton — mostly from fast-growing developing countries. She calls it a cotton bubble that could soon burst, leaving farmers wondering what to plant.
JOHNSON: A lot of producers may find it difficult to handle these kind of price swings and be able to maintain a position.
One of them is Tim Luckey, a fourth generation cotton farmer in Milan, Tenn.
TIM LUCKEY: When my father was farming, the price of corn or cotton didn’t fluctuate four, five cents a year. Now cotton will fluctuate three cents a day.
Some blame speculators for the quick rise in price. Jeffrey Christian is managing director of the commodity research firm CPM Group. He says big investors have thrown a lot of money into cotton in recent years.
JEFFREY CHRISTIAN: That’s relatively easier in gold. But when you start getting into smaller markets like cotton or coffee or cocoa, it takes very little shift in investment money into these markets to drive the price sharply higher.
What does all this mean for consumers? Well, that $10 dollar t-shirt may soon cost $12.
CHRISTIAN: In the t-shirts and the underwear and the lower-cost cotton garments, I believe you’re already seeing the impact of higher cotton prices.
Perhaps it’s time for polyester to make a comeback. Sharon Johnson says her husband might still have his old leisure suit in the back of his closet.
JOHNSON: Well perhaps so, we might have to have it re-fitted just a bit.
I say go for it.
In New York, I’m Jeremy Hobson for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.