Allenberg Cotton Co., president and CEO Joe Nicosia had these words of advice for farmers attending the Ag Update meeting at the Mid-South Farm and Gin Show, in Memphis. “Plant every acre you can to cotton.”

Nicosia says the job of the cotton market this year is to encourage the production of enough cotton to more than satisfy demand, even if there is a production problem somewhere around the world.

New crop futures prices of around $1.30 per pound will provide that incentive. In fact, Nicosia is expecting a massive global area response to high cotton prices and increased profitability for cotton, which he estimates would result in world production of around 132 million bales in 2011-12.

With increased plantings expected in the United States, Nicosia believes the U.S. crop in 2011 “will be well over 20 million bales. We think carryout is going up. The numbers may look bearish. But if something goes wrong, it’s going to explode.”

The other side of the production equation, world yield, is still anybody’s guess, Nicosia noted. “We guess that there will be 132 million bales produced in the world. It could be 138 million bales. But if we have a problem and we’re back down to 124 million bales, the price is going higher.”

Nicosia said to effectively transition from old crop to new crop, “will require demand destruction of about 5 million bales until we get to new crop.”

Nicosia said the market must do this “by reducing cotton inventories, which it has already done; increasing substitution, which is increasing the use of the ‘P’ word (polyester); shortening the pipeline, which is increasing efficiency of shipping cotton; reducing mill profitability; reducing retail inventories; or lowering consumer demand.”

Nicosia advises producers “to plant every acre you can to cotton this spring. Profitability is phenomenal and the marketplace is asking for it. Take advantage of it. This will be the best time ever in your lives to plant cotton.”

The market will continue to be extremely volatile, with new crop cotton prices potentially ranging from 90 cents to $1.80 a pound. Nicosia added. “There is a lot of risk. Lock in your profits. If you sell your cotton, buy a call, or buy a put and sit still. If something goes wrong, we know where the upside is.”

But I’ll leave you with this, “If you’re planting cotton in 2011-2012, it’s going to be one great year.”