Cotton prices exploded to a four-year high this week, trading over 96 cents per pound on Tuesday.
Prices are being boosted as farmers across the South are struggling with weather issues. In the Southeast, heavy rains are battering fields, while drought in Texas and Oklahoma could damage the crop there.
These high prices have inspired farmers to increase cotton acreage to the highest level in seven years, planting about 13.5 million acres this season. Many farmers, especially in Oklahoma and Kansas, are planting cotton instead of lower-value crops like wheat and soybeans.
Cotton was the most valuable American export from 1803 to 1937, earning the title “King Cotton” during that period. It continues to be a major agricultural export, with over 70% of U.S. cotton being sent abroad, primarily to garment-producing countries like Honduras, Mexico, the Dominican Republic, and China. Thus far, cotton has largely avoided trade war threats, but it would be an extremely susceptible market if China or Mexico retaliated against U.S. cotton.
Additionally, the global market is concerned that China is sitting on a massive stockpile of cotton that it could unleash, potentially collapsing prices, a fear that keeps cotton farmers and traders on edge around the world.