Cotton Contracting Considerations

*This article is not a substitute for the advice of an attorney.*

Recently, the Texas Farm Bureau published an article written by Dr. John Robinson, the cotton marketing specialist here at Texas A&M and myself titled Cotton Contracting Considerations in its Texas Agriculture Magazine.

Photo via Jennifer Blackburn Photography

The article discusses the historic use of forward contracts in selling agricultural commodities, the advantages and disadvantages of using these commodity sales contracts, and historical patters regarding contracting and marketing pools.  Dr. Robinson also discusses the 2010 cotton crop, for which prices rose to historic highs and led to an extremely high number of cotton contracting related disputes, particularly in Texas.

Finally, we offer a list of considerations for commodity producers considering entering into a forward sales contract:  (1) read the contract; (2) have an attorney review the proposed contract; (3) if objectionable terms exist, negotiate or refuse to sign the contract; (4) understand there are risks associated with forward contracting.

Click here to read the full article, which begins on page 16.

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