White stuff, Texas-style

LIFE in the modern American cotton industry is relatively calm. In recent years, for example, producers began using plastic straps to secure bales of ginned cotton to the trucks. Plastic bands are safer than steel, and recyclable. So the events of 2010 took some people by surprise. John Barrett, a cotton producer based in south Texas, explains that around March of last year most of the farmers he works with were happy to contract for that year's crop at roughly 80 cents a pound. It was, historically speaking, a good price. Hardly anyone expected that, by harvest time, prices would have nearly doubled. In December cotton futures hit a nominal record of $1.59 a pound. The last time prices were so high was during the civil war and its aftermath.

This time round, circumstances are less dramatic. The demand for new clothes is growing as the world pulls out of recession and as incomes rise in the developing world. And last year the supply was constricted. China, the world's largest producer of cotton, had production problems, and even during normal years it consumes more of the fibre than it produces. Floods in Pakistan destroyed much of that country's crop. India, in order to keep enough cotton for its own textile mills, announced an export ban.

Some of the gains may have been speculative. Many investors have gone long on commodities: from precious metals to humble grains, most of them had a banner year in 2010. But Gary Adams, the vice-president of economics and policy analysis for the National Cotton Council, reckons that the high prices were mostly due to fundamentals. He points out that cash prices have stayed high, even as futures started to come down at the end of last month, and that most of the cotton is out of the warehouses.

High prices have helped draw attention to some disputes among the states. Texas began gaining ground in cotton production after Australian scientists developed a type of high-quality long-staple cotton called FiberMax. For whatever reason, FiberMax seed fares better in the south-west than in the Deep South, and Texas now produces roughly half of America's cotton. (Last year America produced 18.3m bales—each bale weighing 480lb, or 218kg—and exported more than 80% of them.) Locals in Corpus Christi, a small city on the southern side of the Gulf coast, say this is one reason why their port should become an officially designated delivery point for cotton futures. Francis Gandy, a cotton farmer and member of the Port Commission, argues that once the expansion of the Panama Canal is completed, in 2014, Corpus Christi would be a natural loading-point for cotton shipments bound for Asia.

In any case, cotton prices are likely to stay high for some time. America's farmers will devote more acres to the crop this year, but cotton still has to compete for space with similarly booming crops such as wheat, corn and soyabeans.

That is not a bad dilemma for American farmers. Still, cotton has its troubles. It still has to keep an eye on upstart man-made fibres, such as polyester. And, much more worrying, the textile industry has all but disappeared in the United States. As most of the world's mills are elsewhere, American cotton faces heavy freight charges. But American producers argue that they have a few advantages, such as regulatory predictability and quality control. The country has pretty much defeated the boll weevil, and the Department of Agriculture individually tests every bale on obscure measures such as the tensile strength of the fibres. Foreign textile mills, they hope, have cottoned on to the difference.