Looking at the world situation, he says Brazil, Argentina, Australia, and other southern hemisphere countries are making good crops and feeding that cotton into the market. Pakistan’s cotton crop is looking very good after last year’s disaster, he says.

“This year, we’re looking at a big increase in world production, maybe as much as 10 million to 12 million bales over 2010. Even with the most optimistic usage figures, we’re going to see production exceed usage by 8 million to 12 million bales..

“In the past, when we’ve seen a big increase in the world price of cotton, we’ve also seen a big slowdown in world use. My thinking is that we’ll see about a 1 million bale carryover in the U.S. crop and about 10 million bales for the world crop.

“This would point to a price of about $1.15 for December 2011 cotton. We’re at $1.13 today, a big drop from the $1.40 range in June.

“December 2011 has had strong support at $1.15, but it looks like the market wants to slip down through that, and my concern is where the low end of the price range will be — that we could test the $1 level if we don’t get an under-16 million bale crop.”

It will depend, Anderson says, on how this year’s U.S. and world crops unfold.

“Short term, I think we’ll see a range of $1.10 to $1.20, and in the longer run from $1 to $1.25. Under a worst case scenario, we could see December 2011 slip below $1.

“Much of what we’ve seen with $1-plus prices has been driven by non-market users — I call them speculators — and it bothers me no end that we can see the market go up simply because a lot of funds come in on the buy side.

“My hope is that we can hold the price at 90 cents or better, or it will below our cost of production.

I’m very concerned,” Anderson says, “when I walk through clothing stores and see men’s dress shirts that are 50 percent polyster/50 percent cotton, where I used to see 100 percent cotton. I think this is where high prices have hurt our export demand and our China demand, causing mills to shift over to man-made fibers. And that business may not come back quickly.”