Record drought shrivels U.S. cotton crop

A monster drought in Texas and five other Western states may wipe out 30 percent of the U.S. cotton crop. The government estimated that warehouse stockpiles of cotton were the lowest in 15 years, and “This bottleneck situation could temporarily spike prices,” according to Peter Egli, a Chicago risk manager at Plexus Cotton Ltd. Cotton prices reached an all-time high of $2.19 a bale in March 2011, causing U.S. farmers to plant more acres in cotton. Now, cotton prices have plunged 28 percent, although shortages may spur speculation and increase domestic cotton prices in coming months. Egli expects U.S. manufacturers to tap into cotton supplies from Australia and Brazil, but the cost of cotton clothing made by American companies is expected to increase. For more, read the U.S. Department of Agriculture’s most recent outlook on cotton production.