One-dollar cotton is not sustainable for any length of time, and prices likely will fall to the low 80s, possibly mid-70s, by summer, and even lower by next fall, says Sharon C. Johnson, senior cotton analyst with First Capitol Ag.

“History tells us that prices this high this early in the season grind lower over time,” said Johnson, speaking at the 2010 Southern Regional Outlook Conference held in Atlanta last month.

While she believes USDA estimates are low on the 2010 U.S. crop and world supply, Johnson still predicts “incredibly low” ending stocks. Globally, cotton acreage is limited, and in countries like India, the government is concerned more with growing enough food for its people. But the ending stocks situation still won’t be tight enough for more dollar cotton, she says.

During the 44 years the A Index has been keeping records, cotton has been at $1 or higher for a very limited number of days, she says. For this reason, Johnson said in late September she would sell 30 to 40 percent of December 2011 cotton now, with prices in the mid-80s.

“This may seem aggressive, but every time we’ve seen cotton go this high, prices have dropped. It’s going to take a little longer this time,” she says.

Looking at the macro-economic environment in which the current cotton price rally has occurred, Johnson says that while there has been sub-par growth in developed countries, developing countries have seen strong GDP growth. “Even after the U.S. declared the end of the worst recession since the Great Depression, unemployment has increased and there’s concern about the dollar. A stronger Chinese Yuan will hurt textile exports but make cotton imports cheaper. The same for a weaker U.S. dollar — cotton exports are cheaper, but textile imports are more expensive,” she says.

The United States has “muted” economic growth, she says, with stubbornly high unemployment and lower housing values, both of which will take years to repair.