MEMPHIS, Tenn. (AP) -- Cotton prices have risen above $1 per pound due to rising demand, and Tennessee farmers have responded by planting more of the crop this year, a Memphis-based economist said.
The Cotlook "A'' Index, widely considered a barometer of world prices, put cotton at $1.11 per pound Wednesday, The Commercial Appeal in Memphis reports. Prices rose above $1 per pound early last week.
Cotton prices took a hit in a difficult economy. The index showed cotton prices at 50 cents per pound in April and just higher than 60 cents last October.
In the mid-South, cotton competes with corn and soybeans, whose prices have remained competitive.
Gary Adams, chief economist with the Memphis-based National Cotton Council, says cotton priced at $1 per pound was last seen in the mid-1990s.
Adams said there are several factors for the rising prices. One is that consumer demand has pushed material demand from global textile mills higher. China's expanding economy has created more demand for cotton.
Also, Adams said mills have used cotton stockpiles they relied on during the recession and are now looking to buy. And, an estimated 20 percent of Pakistan's cotton crop was damaged in that nation's disastrous August flooding.
"A lot of it reflects a turnaround in demand from the contraction we had in the latter part of 2008 and 2009 during the recession," Adams told the newspaper. "We seem to be bouncing back. Part of it's still a replenishing of the textile pipeline as we worked through a lot of the stocks we had on hand."
In the U.S., farmers are responding, planting 10.9 million acres of cotton this year, according to the National Agricultural Statistics Service. That's up from 9.1 million acres last year.
In Tennessee, farmers have planted 400,000 acres this year, above the 300,000 acres planted last year and the 285,000 acres planted in 2008. The state's cotton farmers planted 700,000 acres when prices rose above $1 per pound in 1995.
Cotton has many uses, including some that may be surprising. Buckeye Technology uses cotton linters, the silky fibers left on cotton seeds after ginning, for products used in hot dog casings and LCD television screens.
"If there's a bigger supply in the U.S., we also don't have to bring in fiber from foreign markets, and it's a big cost to bring fiber in from markets like Brazil or the Middle East," said John Lewallen, Buckeye's cotton fiber procurement and compliance manager.
Information from: The Commercial Appeal, http://www.commercialappeal.com
Copyright 2010 The AP.