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China market dictates U.S. cotton prices

Ideal growing conditions in Texas have produced a bumper cotton crop that will likely push cottonseed prices to historical lows this fall.

That's good news to dairy producers who want to add an economical source of fiber, protein and energy to their cows' rations. To capitalize on low prices, industry experts recommend booking as much as 100 percent of their cottonseed needs no later than in December or January.

“Even the hurricanes that ravaged the southeastern U.S. this summer did little damage to the cottonseed supply,” said Tom Wedegaertner, director of cottonseed research and marketing, Cotton Incorporated, from headquarters in Cary, N.C. This year's cotton crop is expected to tilt the scales at a record 7.7 million tons, a 15 percent increase over last year's 6.7 million tons.

“The question is, ‘How low can prices go?’” said Larry Johnson of Cottonseed LLC, La Crosse, Wis. Dairy producers will need to keep a close eye on the prices and movement of this crop during the upcoming harvest, he suggested.

“Right now, chances are good that cottonseed prices will fall even lower,” he said, adding that some producers have begun booking 20 to 50 percent of their needs anyway. “When the numbers fit for the operation, and the carry does not exceed $15 per ton, producers should lock in their year.”

Transportation will play a bigger role this year with more commodities competing for fewer truck and rail options. “With fewer long-haul trucks running and fuel surcharges up 14 to 15 percent, producers need to factor freight into their decision-making process,” he explained. “Producers should find out where pricing stands with and without surcharges.”

World trade patterns remain another important consideration, he adds. Increased imports of Australian cottonseed, which are expected to arrive in the United States this May, could have an impact on the market. However, steady cottonseed exports to Asia, Saudi Arabia and Mexico now through April may balance the influx.

Depending on how well cottonseed competes with other commodities, this year's cottonseed crop stands a good chance of entering the beef market, Johnson says.

“If cottonseed starts going into the feedlots, supply will disappear. The beef cattle in Texas can easily take up the excess.”

Wedegaertner concurs. “Even though we may have nearly a million more tons of cottonseed available for feed than last year, dairy producers need to consider that once beef producers start feeding it, the surplus will quickly evaporate - along with any chance for further price reductions.”

It may be a gamble to wait for low prices to go even lower.

“This is an incredible opportunity to ensure that this valuable feedstuff is part of the ration,” Wedegaertner says. “For a high-producing string, cottonseed must remain in the mix.”

Cottonseed is an excellent and economical source of fiber, protein and energy; it also helps maintain a good environment in the rumen.

Typical rations include up to 15 percent cottonseed on a dry matter basis.

For more information on cottonseed, including reports on market conditions, feeding information and a list of suppliers, visitthe Web site

Cotton Incorporated, funded by United States growers of upland cotton and importers of cotton and cotton textile products, is the research and marketing company representing upland cotton.

e-mail: [email protected]

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