As expected, the strong yield of cotton crop all over the world, the compulsion for U.S to export cotton due to shrinking domestic consumption and China’s capacity to import record volume are driving the price volatility. "One thing about this year that’s totally different from any year since I’ve been in the business since 1978 is the price volatility," Jernigan says. “The market is taking a very cautious approach to this,” Jernigan says. “When the market believes it, they get excited about prices.”

“People are scared to death,” says Ed Jernigan, president and CEO of Globecot and the Jernigan Group. “Last year they felt like they knew what was going on in China. This year people don’t believe they know what’s going on in China. One minute it looks bullish and they’re buying and getting excited and if the Chinese back off, then it gets bearish.

“There’s no question the world will produce a record volume crop,” he says. “It’s coming from the U.S., China and India”. He doesn’t believe prices will collapse. “I think there will be a tendency for strong demand below 45 cents in the futures,” Jernigan says. “It will face a lot of resistance on rallies up near 60 cents.

The cotton-marketing expert says two things came out of the bear market. One, with the U.S. textile industry gone, the U.S. has got to export cotton. The second caveat is, the futures contracts are out of touch with the marketplace.

Apart from China, a lot of the other exporting cotton countries haven’t sold their crop yet. He says more than 4.5 million bales of African cotton has not been sold. “That’s a bearish factor overhanging the market.”