Common folklore says the early bird gets the worm. Georgia
cotton growers may not want
the worms, but high prices provide plenty of incentive for early
action.

"We’re seeing forward contracts offered at 75 cents a
pound," said Don
Shurley, an economist with the University of Georgia Extension
Service.

"This is the highest we’ve seen prices this early in the
season in at least the
past three years," he said.

The high prices balance mostly on two conditions, he said.
Low 1995 yields have kept
U.S. markets tight, and the ongoing farm bill debate in
Washington has kept everyone
guessing about how much cotton farmers will plant this year.

The U.S. Department of Agriculture doesn’t release its first
acreage estimate until
late March.

"The ‘Freedom to Farm’ issue will allow farmers more
flexibility," Shurley
said. He expects farmers to base their planting more on what the
market will support than
on what the government allows them.

Potential peanut quota cuts may help farmers decide to plant
more cotton. But Shurley
said corn and soybean prices are high this year, too. Some
farmers may shift part of their
cotton acreage to these crops.

The National Cotton Council figures U.S. cotton acreage will
drop by 8 percent this
year, to 15.5 million acres. Georgia estimates (1.41 million
acres) are down 6 percent
from 1995.

"Nationally, with normal yields, we should make 19
million to 20 million bales of
cotton," Shurley said.

So how long will prices and forward-contract offerings remain
high?

Early-season weather and fluctuating world and domestic
demands can affect prices
minute-by-minute, Shurley said. But if domestic consumption and
mill demands stay high,
farmers could see high prices through 1997.

No matter what the price, he said, farmers have an
opportunity to cut their marketing
risks.

"They can use forward contracts or options to provide
price protection,"
Shurley said. "They will still be able to benefit from
later price increases."

Farmers should be aware of discounts from lower-grade cotton
or from trash after
harvest, too. One-quarter to one-third of the crop is discounted
for spotted lint.
"That can cost growers 3 cents to 5 cents a pound,"
Shurley said.

Other money-makers include selling cottonseed. Cottonseed
prices have risen from about
$65 per ton in 1993 to more than $80 in ’95.

"Of the most common uses of cottonseed, ‘crush’ delivers
the most value," he
said. The ginned seed can be crushed for oil and the remaining
meal used for livestock
feed.

That added value helps keep cotton prices up, too.

Shurley said cotton requires a lot of work to grow. "The
management level is very
high for everything from actual production through
marketing," he said, "but for
growers who manage their crop and marketing plans well, the
rewards can be great."