This Week in Ag #86

Yesterday was #WorldCottonDay. That’s a fitting title, considering how creating the world’s most popular fabric is truly a world endeavor. Cotton is a crop mostly grown in Asia and the Americas, whose end products are mostly designed in Europe and mostly manufactured in Asia, and largely consumed in the world’s wealthiest countries (the USA accounts for one-quarter of all global fashion spending, despite having 4% of the world population). India is the world’s leading producer of cotton, at 5.9 million tons annually, followed closely by China. The US ranks third; next is Brazil. Collectively, these four countries account for nearly three-quarters of all global cotton output.

Cotton is a plant that thinks it’s a tree. And who can blame it. It’s a perennial crop grown as an annual. Left to its own devices, cotton plants will exceed six feet in height, but plant growth regulators are used to keep the plants around four feet. Managing the vegetative and reproductive aspects of the plant is one of the biggest challenges for growers. Prior to harvest, the plants must be defoliated – essentially killed – prior to harvest so that the bolls can be efficiently picked. In addition to the comfort and softness of its end products, a big advantage to cotton is sustainability. At its core, cotton is the natural fabric; a renewable resource grown by 32 million farmers around the world. But that’s just where cotton’s sustainability starts. While it’s largely purchased by rich countries, cotton serves as a critical economic opportunity for many impoverished nations, helping provide income to developing parts of the world. Cotton products are also recyclable. Programs such as Cotton Incorporated’s Blue Jeans Go Green have raised awareness for garment recycling and lowered landfill waste. Driven by consumer preferences, many brands are marketing sustainably grown cotton that utilize earth-friendly practices that conserve soil and water, while reducing synthetic inputs. Data capture, reporting and traceability is enabling fashion and home brands to offer the transparency consumers are looking for, resulting in premium opportunities for growers.

Harvest may be in full swing, but farmer attitudes are in full down swing. Based on the monthly Purdue tracker, farmer sentiment is at the lowest point in the study’s 9-year history. The Ag Economy Barometer dropped 12 points last month. Just as alarming are the underliers. Farmer’s financial expectations dipped four point below last month’s record low. This Farm Financial Performance Index, now at 68 (100 is the benchmark), is 31 points lower than just nine months ago. The biggest concerns continue to be crop input prices (34%) and low commodity prices (33%). Interest rates appear to be lessening as a top concern, at least relatively speaking, likely due to the Fed’s recent drop and speculation of further reductions. Or maybe because price issues are so prevalent. With corn in the 3s, soybeans now back in the 9s and wheat in the 5s, it’s easy to see why. Another area that’s driving unease is concern over upcoming national elections, expressed by 78% of respondents.