Anthony Tancredi has been in the cotton business a long time. Never, he says, has he seen anything like the cotton market over the past year.

Tancredi is president of Allenberg Cotton Company in Cordova, Tenn. Speaking at the recent Southern Cotton Growers meeting, he says, “When CNBC starts playing cotton everyday, you know things have changed. Even on their website, cotton is listed as the No. 1 commodity.”

“I’ve had more people ask me about cotton in the past year than in the previous 24 years I’ve been in the cotton business,” he adds.

“Cotton is in a volatile marketing situation and as long as it remains this way, the best thing for a grower to do is to always expect the unexpected,” Tancredi says.

How did we get into this situation? The worldwide depression officially ended in June 2009, and cotton prices jumped from 55 cents a pound to 75 cents a pound. Worldwide, more people planted cotton.

“Cotton supply worldwide went from being scarce to being a shortage and cotton jumped to $1.50 cents a pound and insanity was the normal course of action in the cotton market. Most of the moves we see now are based on emotion, not on economics,” Tancredi says.

“There is a lot more interest in cotton globally. Supply is low, demand is high and prices follow demand. What cures high prices? High prices! Demand for cotton has slowed, but it’s slowed much slower than anyone expected,” he adds.

“For what seems like forever, we were side-ways with cotton. No matter how much demand there was globally, someone always had cotton to sell. At the end of last year, there was a massive draw down on supplies and for the first time in memory nobody had cotton to sell.  That’s the situation we’re in now, Tancredi says.

Nothing highlights worldwide cotton like the U.S. cotton industry. The carryout is incredibly small — just over one month usage in the U.S. Whether these numbers hold up for the rest of 2011 is the big question.

Stocks to use ratio in the U.S. is a record low. Maybe for the first time in modern cotton history there just simply isn’t enough cotton. Prices in the spot market and the futures market are incredibly volatile. Prices for cotton are moving around 10-15 cents, the differences in the spread just don’t make any sense,” Tancredi contends.