“It’s in the hands of Chinese bureaucrats, and no one knows what they’ll do. If anything happens that decreases that export projection, then it’ll only get worse.”

The big wildcards in the world cotton market include Chinese cotton stocks, polyester over-capacity, and cotton demand, he says.

If 2011 proved anything, says Robinson, it was that it doesn’t really matter what the weather is like in the United States or in Texas in terms of the price of cotton. “Drought was much worse last year, and the price of cotton went from $2 to 90 cents, mainly because it’s even more important that we’re in a global market, and we had plenty of cotton in the world.

“This year, we have been dry, and USDA has cut bales out of the production estimate. I don’t think that’ll have an effect on the market,” he says.

Robinson says he expect cotton futures will weaken once production uncertainties are removed from the market later this year.

One implication of lower prices is that growers should put more thought into their selection of crop insurance options, he says.

“Two years ago, their insurance base price was in the $1.20 range, and last year it was 93 cents, so they’ve had high base prices, and it worked out pretty good in a drought year.

“For this next year, if you buy a 65-cent policy and ignore the yield risk, it won’t be a much higher price than the loan rate.”

The current farm bill proposals for cotton basically tack on additional layers of coverage, says Robinson. “So if you bought a 65-cent revenue or yield policy, the new farm bill will add on coverage, and it’ll give some price protection but not a whole lot.

“We’re not going to have super low prices, but we’re also not going to have high ones. And even if you take stacks on top of a 65-cent revenue policy, you probably won’t cover your costs. This year, a revenue policy won’t give you enough price protection.”

There’s nothing in the current picture that will cause a price rally, he says.

“There were weather problems in India, but those appear to have been resolved in recent months. I think we’ll weaken to just below 70 cents, based on demand, and it won’t matter if we have a shortfall — that’ll only mean we have slightly less historically large ending stocks.”

One of the most important price influences affecting cotton is weak demand, says Robinson, and that won’t change anytime soon.

There was a time, says Robinson, when the world supply was 76 million bales, and now world ending stocks are that high.

“But we are returning to normal as far as supply and demand influences and fundamental influences on price.

“China is holding huge reserve stocks — they’re off the shelf, and they’ve created an artificial shortage, but it’s still the largest stored stocks we’ve ever seen.”

phollis@farmpress.com