Farmers expect to plant more cotton
February 10, 2014 | 09:43 AM
American farmers plan to increase cotton planting this spring even though China's import policies are uncertain because they view cotton prices as superior to other crops, the National Cotton Council said at its annual meeting in Washington last week.
U.S. cotton producers intend to plant 11.26 million acres of cotton this spring, up 8.2 percent from 2013, the Cotton Council's 31st Annual Early Season Planting Intentions Survey showed.
Gary Adams
Gary Adams, NCC’s vice president for economics and policy analysis, said the December cotton contract was 5 percent lower than a year ago, but prices for corn and soybeans had fallen even more. Cotton prices have since rallied, but the prices of cotton and all commodities remain volatile.
Planting intentions vary dramatically by region and state, with consequent impacts on the acreage for other crops.
Survey respondents throughout the Southeast indicated a 1.2 percent decline, lowering the regional total to 2.63 million acres. In Alabama and Virginia, the increase in cotton acres is coming at the expense of corn.
For states reporting declines in cotton area, respondents in the Carolinas indicated a shift into soybeans, while Florida’s cotton acreage is moving into peanuts.
In the Mid-South, survey results show that growers intend to plant 1.39 million acres, an increase of 12.5 percent. In Arkansas, survey respondents indicated a 4.6 percent decline in cotton area was due to an expected increase in acres devoted to soybeans. Responses for Louisiana, Mississippi and Tennessee indicated an increase in cotton acres coming at the expense of corn.
In the Southwestern states of Texas, Oklahoma and Kansas, growers indicated a 12 percent increase, with a shift out of grains and the planting of some acreage due to better moisture conditions than in 2013.
In the West, the survey reports 2014 upland area of 275,000 acres, down roughly 6 percent from 2013.
Arizona and New Mexico growers intend to plant more cotton acres in 2014, while California will decrease upland cotton acres due to limited water availability and competition from other crops. California growers also intend to move some acres out of upland cotton and into extra long state cotton to take advantage of higher Pima prices.
Applying each state’s yield to its 2014 projected harvested acres generates a cotton crop of 16.37 million bales, with 15.72 million bales of upland and 657 thousand bales of ELS, NCC said. If realized, that would be an increase of 3.2 million bales from the current USDA estimate of the 2013 crop.
Adams noted that China, the biggest market for U.S. cotton, has been building cotton reserves since a price spike in 2011, but has announced its intention to switch to a target price mechanism.
“For the past three years, China has been importing the world’s surplus while its own production has entered the reserves,” Adams said. “For the 2014 marketing year, that dynamic appears poised to change.”
“While details of [China's] policy have not been finalized, there are several questions that are as of yet unanswered," Adams said. "What, if any, support is provided to cotton in the eastern regions of the country? How will China manage the current government reserves? And what will be the impact on China's imports of raw cotton?”
China needs to reduce its production area or consume more cotton to work through those stocks, he said.
Cotton demand is expected to grow, based on competitive prices with polyester and continued economic growth, but the growth is not enough to prevent an increase in stocks, NCC said.
China is not expected to import as much cotton as in past year, and there will be aggressive competition from countries other than the U.S. to capture a smaller Chinese market, Adams said.
The U.S. milling industry has been energized by the Economic Adjustment Assistance Program (EAAP) that began with the 2008 farm bill, he said, with some new investments and expansions.
The EEAP program continues under the 2014 farm bill, which may lead to further upgrades of existing facilities or construction of new ones and U.S milll use is projected to increase to 3.7 million bales up from 3.6 million bales in 2013 , he added.
NCC did not comment further on the impact of the new cotton program on the industry.
U.S. cotton producers intend to plant 11.26 million acres of cotton this spring, up 8.2 percent from 2013, the Cotton Council's 31st Annual Early Season Planting Intentions Survey showed.
Gary Adams
Gary Adams, NCC’s vice president for economics and policy analysis, said the December cotton contract was 5 percent lower than a year ago, but prices for corn and soybeans had fallen even more. Cotton prices have since rallied, but the prices of cotton and all commodities remain volatile.
Planting intentions vary dramatically by region and state, with consequent impacts on the acreage for other crops.
Survey respondents throughout the Southeast indicated a 1.2 percent decline, lowering the regional total to 2.63 million acres. In Alabama and Virginia, the increase in cotton acres is coming at the expense of corn.
For states reporting declines in cotton area, respondents in the Carolinas indicated a shift into soybeans, while Florida’s cotton acreage is moving into peanuts.
In the Mid-South, survey results show that growers intend to plant 1.39 million acres, an increase of 12.5 percent. In Arkansas, survey respondents indicated a 4.6 percent decline in cotton area was due to an expected increase in acres devoted to soybeans. Responses for Louisiana, Mississippi and Tennessee indicated an increase in cotton acres coming at the expense of corn.
In the Southwestern states of Texas, Oklahoma and Kansas, growers indicated a 12 percent increase, with a shift out of grains and the planting of some acreage due to better moisture conditions than in 2013.
In the West, the survey reports 2014 upland area of 275,000 acres, down roughly 6 percent from 2013.
Arizona and New Mexico growers intend to plant more cotton acres in 2014, while California will decrease upland cotton acres due to limited water availability and competition from other crops. California growers also intend to move some acres out of upland cotton and into extra long state cotton to take advantage of higher Pima prices.
Applying each state’s yield to its 2014 projected harvested acres generates a cotton crop of 16.37 million bales, with 15.72 million bales of upland and 657 thousand bales of ELS, NCC said. If realized, that would be an increase of 3.2 million bales from the current USDA estimate of the 2013 crop.
Adams noted that China, the biggest market for U.S. cotton, has been building cotton reserves since a price spike in 2011, but has announced its intention to switch to a target price mechanism.
“For the past three years, China has been importing the world’s surplus while its own production has entered the reserves,” Adams said. “For the 2014 marketing year, that dynamic appears poised to change.”
“While details of [China's] policy have not been finalized, there are several questions that are as of yet unanswered," Adams said. "What, if any, support is provided to cotton in the eastern regions of the country? How will China manage the current government reserves? And what will be the impact on China's imports of raw cotton?”
China needs to reduce its production area or consume more cotton to work through those stocks, he said.
Cotton demand is expected to grow, based on competitive prices with polyester and continued economic growth, but the growth is not enough to prevent an increase in stocks, NCC said.
China is not expected to import as much cotton as in past year, and there will be aggressive competition from countries other than the U.S. to capture a smaller Chinese market, Adams said.
The U.S. milling industry has been energized by the Economic Adjustment Assistance Program (EAAP) that began with the 2008 farm bill, he said, with some new investments and expansions.
The EEAP program continues under the 2014 farm bill, which may lead to further upgrades of existing facilities or construction of new ones and U.S milll use is projected to increase to 3.7 million bales up from 3.6 million bales in 2013 , he added.
NCC did not comment further on the impact of the new cotton program on the industry.
