U.S. cotton plantings could be up nearly 10 percent to 11 million acres this spring, judging from grower responses to the National Cotton Council's 36th Annual Early Season Planting Intentions Survey.
Cotton Council economists said upland cotton intentions are 10.8 million acres, up 8.8 percent from 2016, while extra-long staple intentions of 266,000 acres represent a 36.9 percent increase. The survey was released at the NCC’s annual meeting in Dallas today (Feb. 11).
The NCC questionnaire, mailed in mid-December to producers across the 17 Cotton Belt states, asked them for the number of acres devoted to cotton and other crops in 2016 and the acres planned for the coming season. Survey responses were collected by the NCC through mid-January.
“History has shown U.S. farmers respond to relative prices when making planting decisions,” said Jody Campiche, the NCC’s vice president, economics and policy analysis. “During the survey period, the cotton December futures contract averaged 70 cents per pound, which is higher than year-ago levels.
“Looking at competing crops, corn prices were lower than year-ago levels while soybean prices were about 12 percent higher. The price ratio of cotton to corn is more favorable than in 2016,” Dr. Campiche said.
If realized – and Dr. Campiche noted planted acreage is “just one of the factors that will determine supplies of cotton and cottonseed” in 2017 – this would be the second year cotton plantings have increased after falling to their lowest level in three decades in 2015.
In 2015, growers planted 8.58 million, the lowest since the payment-in-kind program in 1983. Last year’s farmers planted 10.07 million acres and harvested 9.5 million acres, producing a crop of 16.96 million bales, according to USDA.
Producer delegates to the annual meeting indicated that recent upticks in cotton prices and lack of other profitable crop options suggests cotton will be their best bet for 2017. Travis Mires, Lynn County, Texas, says he will increase cotton acreage. “We would like to plant some milo but we can’t make any money with it,” he says.
He does have some wheat planted but says winter weather has not been good for wheat.
Shawn Holladay, Lamesa, Texas will increase cotton acreage and plant peanuts for the second year.
Other growers from across the Cotton Belt indicated that cotton looks better than other options for 2017. Other observers noted that the atmosphere at the annual meeting seemed considerably more upbeat than it was last year.
The cotton industry does have some reason for optimism, according to Dr. Campiche. She said the global economy continues to struggle, but is improving. She said recent increases in prices and anticipated ongoing reduction of China’s cotton stocks offer opportunities for optimism for 2017. She also cautioned that manmade fiber remains a serious competitor for cotton share in the marketplace.
Berrye Worsham, Cotton Incorporated president and CEO, said cotton is making inroads into “active wear” markets through new technology, and that declines in apparel and home furnishings have stabilized, turned or appears to be bottoming out. “We are entering 2017 with a little more optimism, he said.”
With abandonment assumed at 12 percent for the United States, Cotton Belt harvested area for 2017 would total 9.7 million acres. Using an average U.S. yield per harvested acre of 830 pounds generates a cotton crop of 16.8 million bales, with 16.0 million upland bales and 760,000 ELS bales, Dr. Campiche noted.
Survey respondents in the Southeast indicated a 0.1 percent increase in the region's upland area to 2.2 million acres. Across the six states, the results are mixed with increased acreage in Alabama and Florida and a decrease for the other four states. In Alabama, the survey responses indicate 14.2 percent more cotton acreage and less corn and wheat area. In Florida, respondents indicated more cotton and less soybeans. In Georgia, cotton acreage is expected to decline by 3.1 percent with 'other crops', likely peanuts, pulling acres from cotton, corn and wheat. In South Carolina, acreage is expected to decline by 0.4 percent as cotton acres shift to soybeans and 'other crops.' In North Carolina, a 4.8 percent decline is expected as cotton acreage shifts to soybeans and 'other crops.' Cotton acreage is expected to decline by 1.0 percent in Virginia as acreage shifts to corn and 'other crops.'
In the Mid-South, growers have demonstrated their ability to adjust acreage based on market signals, in particular, relative prices of cotton and competing crops. This year's survey results are no different with growers intending to plant 1.7 million acres, an increase of 12.8 percent from the previous year. Across the region, all states are expected to increase cotton acreage while decreasing acreage of corn and “other crops.” The largest increase was reported in Mississippi with 26.8 percent more cotton acreage in 2017. Mississippi respondents expect to decrease acreage of all other crops as more cotton acreage is planned. In Tennessee, cotton acreage is expected to increase by 16.6 percent as land shifts away from corn. In all states except Mississippi, soybean acreage is expected to increase. In Arkansas and Missouri, corn, wheat, and 'other crops' are expected to decline. In Louisiana, respondents indicated more cotton, soybeans, and wheat and less corn and 'other crops.'
Southwest growers intend to plant 6.6 million acres of cotton, an increase of 10.7 percent. Increases in cotton area are expected in each of the three states. In Kansas, land is shifting away from wheat, corn, and soybeans. In Oklahoma, a 30.1 percent increase is expected as wheat acreage declines. Overall, Texas acreage is expected to increase by 9.5 percent as land shifts away from corn and wheat.
Far West producers are expecting to plant 268,000 upland cotton acres – a 15.1 percent increase from 2016. Arizona is responsible for the large increase, with California acreage down slightly and New Mexico acreage up slightly. The survey results for Arizona suggest a shift from corn and “other crops” to cotton.
The increase in cotton acreage is largely the result of weaker prices of competing crops, improved expectations for water availability in the West, and above average cotton yields in 2016.
While current futures markets have increased since last year, many producers will continue to face difficult economic conditions in 2017, according to the NCC Economic Review prepared by Campiche and other NCC economists.
“Production costs remain high, and unless producers have good yields, the higher price still may not be enough to cover all production expenses,” the Economic Report said.
For more details on the National Cotton Council report, visit http://www.cotton.org/econ/reports/annual-outlook.cfm