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2007 Texas corn acreage to increase, declines in cotton forecasted

Fueled by ethanol demand and strong export sales, U.S. corn acreage is predicted to be the largest since 1944 with Texas plantings to increase by as much as a quarter of a million acres in 2007, the U.S. Department of Agriculture reported Friday.

Cotton, the state's number one cash crop, is predicted to drop in acreage by 11 percent or more than 600,000 acres, according to the report. Cotton producers across the state are expected to plant just over 5.73 million acres compared to 6.43 million acres in 2006.

"The first thing to say about it is this is sort of a benchmark on acreage and nobody should take it as a final deal," said Dr. John Robinson, Texas Cooperative Extension cotton marketing economist.

Weather so far has not been a determining factor for agriculture production in Texas, but lack of rain could alter the number of crop acres planted and yields. State agriculture producers are hoping there isn't a repeat of 2006 when crops across the state were ravaged by drought.

"Things have already changed in the last 30 days (regarding weather)," Robinson said. "It's gotten drier in the mid-south. There's a whole lot of variables between now and the next (USDA acreage report) on June 30 when they go out and survey actual acreage."

Prospective corn plantings statewide are predicted to be 2 million acres compared to 1.76 million acres in 2006, according to estimates.

"If we get a good crop year, it could provide some good returns to producers," said Dr. Mark Waller, Extension economics program leader. "In terms of dryland production, we hope it gets the moisture it needs. The moisture situation has improved since last fall, but we don't have a lot of sub-soil reserves. It sounds like things are getting (planted) in the lower part of the state, but we still need good moisture."

Though Texas corn acreage is on the increase, Waller advises producers not to rest on their laurels if they're anticipating high returns on a large crop.

"While it looks like we'll be planting more corn this year and we've got some good potential in prices, producers need to be thinking about what to do in terms of production and price insurance," he said. "If you've planted a lot more corn, don't just sit back and think (prices) will keep going up. Watch the market. When you get some decent pricing opportunities, take advantage of them."

Texas produced more than $561 million worth of corn for grain in 2006, according to agriculture department data. That figure could increase dramatically in 2007 with the potential for larger yields and record-high corn prices.

"I expect to see a corn crop we haven't seen in a while," said Dr. Travis Miller, Extension program leader for soil and crop sciences. "There's rains in the Plains (region) today and the (Central Texas) Blacklands. If people have got it planted, that's perfect timing."

U.S. corn growers intend to plant 90.5 million acres of corn in 2007, up 15 percent from 2006 and 11 percent higher than 2005, the agriculture department reports. By comparison, it would mark the highest number of acres since 1944 when 95.5 million acres were planted. Expected acreage is up in nearly all states as high corn prices are encouraging farmers to plant more acres in corn.

Nationally, Illinois farmers are predicted to plant a record-high 12.9 million acres of corn this spring, up 1.6 million acres from a year ago, while North Dakota (increased 910,000 acres) and Minnesota (increased 600,000 acres) as growers are expected to plant a record number of corn acres.

The drop in Texas cotton acres is in response to the change in corn acreage and the trickle effect on other planted commodities including sorghum and soybeans, economists said.

Some Texas farmers are shifting cotton acreage to corn acreage in the Central Texas Blacklands, Wharton and Lower Rio Grande Valley regions to take advantage of the prices, Robinson said.

"But mainly, it's a question of shifting to grain sorghum or wheat," said Robinson, noting the demand for corn is altering the number of planted acres for other commodities, thus changing the supply-demand equation. Electronic cotton market contracts were trading above 60 cents early Friday.

"The market is still going to grind on and in the short term, there could be a price rally," Robinson said. "If someone were forward-pricing, they may be able to lock something in. To my way of thinking, we need a rally of up to three to four cents for it to be a meaningful opportunity."

U.S. cotton plantings for 2007 are expected to total 12.1 million acres, 20 percent below 2006 levels and the lowest since 1989, the agriculture department reports. Growers intend to decrease planted area in all states with the largest acreage declines in Arkansas, Georgia, Louisiana, Carolina, Mississippi and Texas.

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