Growers of cotton in Texas are expected to remit insurance claims, which will help them break even, according to analysts, brokers and farmers polled by Bloomberg. They said insurance policies will pay more than cotton futures' present prices.
"The number and severity of claims in the Texas Panhandle, High Plains, rolling plains and backlands will be substantially higher than recent years," Armtech Insurance president Ted Etheredge told Bloomberg. "The drought is severe, so non-irrigated acreage in most areas had emergence issues, and now irrigated crops are suffering."
Prospects for harvesting cotton in the U.S. have decreased as a result of the drought tearing through Texas. Though prices are 22 percent higher than they were this time one year ago, the globe's top shipper of the soft commodity is preparing for a loss due to lessened supplies.
Agrimoney reports cotton suffered from not being a required staple, like foods, so it is more prone to adjustments with economic outlook.
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