Cotton Crop

For 20 minutes one day last week, U. S. cotton exchanges hushed their clamor. In England, India and Egypt, brokers awaited news by cable from the nation which grows more than half the world's cotton. Then at the stroke of noon Washington flashed out its best judgment on the 1934 cotton crop: drought in the rich bottom lands west of the Mississippi River had combined with AAA acreage reduction to bring the crop down to 9,195,000 bales--25% below last year, and the lowest, with one exception, in 38 years.* This was more than 1,000,000 bales below the maximum set by the Bankhead Act and about 200,000 bales below the best private estimates of New York Cotton Exchange firms.

It did not take cotton men the full 20 minutes of quiet granted by exchanges to take in the cotton situation. For the past few years the world has used about 14,000,000 bales of U. S. cotton annually-- 6,000,000 bales within the U. S.. 8,000,000 bales abroad. Successive bumper crops over a long period piled up a surplus of U. S. cotton which on Aug. 1 stood at 11,000,000 bales. The small 1934 crop would reduce this carryover to some 6,000,000 bales, almost normal. There would be nothing like a shortage but supply and demand would at least be within striking distance once again. When trading was resumed the price of cotton soared nearly 1/2-c- per lb. in the wildest markets in many months. Distant futures climbed to 14-c- per lb. for the first time since 1930.

Speculators expected no such runaway market as that in grains. Carryover cotton no longer overhangs the trade but one ominous fact does: the U. S. planter is gradually losing his foreign markets to India, China, Egypt. In the past twelve month, while world spinners were using 800,000 fewer bales of U. S. cotton than in_the previous twelvemonth, they were using 1,307,000 more bales of foreign-grown cotton. And the cause of this trend is the simple fact that foreign-grown cotton is cheaper than U. S.

Furthermore, rising prices for domestic cotton have weakened its competitive position against wool and silk. Wool and cotton prices are in approximately the normal relationship of the past 20 years but to raw cotton prices must be added the $21-per-bale processing tax, giving wool a vast advantage. Silk prices are only one-fifth of their 20-year average; cotton prices (exclusive of processing tax) are above. These facts may be a mystery to the U. S. housewife, but her resentment at rising prices for cotton goods is no mystery at all. Despite "cotton weeks'' and other artificial trade stimulants, cotton consumption is now back where it was when President Roosevelt went to the White House in March 1933.

Finally, 14-c- cotton is money in the bank for planters east of the Mississippi--and Atlanta is the one Federal Reserve Capital which continued, last week, to report mounting New Deal prosperity--but 14-c- per lb. for this year's 9,000,000 bale crop will not bring to all cottonland as much money as last year's 13,000,000 bale crop at an average of 10-c-.

*Cotton crop in 1921: 7,954,000 bales. That year the bollweevil did its greatest damage.

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