Cotton growers say they will expand plantings 9 percent this year, displacing corn and some wheat to chase the highest market price in four years, says the National Cotton Council. Nonetheless, “2017 is shaping up to be another challenging year,” said NCC economist Jody Campiche, because of high production costs and the struggling global economy.
The Cotton Council survey of growers, conducted from mid-December through mid-January, is a highly regarded indicator of planting intentions. If growers follow through, the 11 million acres of cotton would produce 16.8 million bales weighing 480 pounds each, slightly below the 16.96 million bales of the 2016 crop because of lower expected yields per acre.
“For the past three years, U.S. cotton producers have struggled with low cotton prices and high production costs,” Campiche said during the council’s annual meeting in Dallas. “Production costs remain high and the slightly higher (futures) price is still not enough to cover all production expenses or many producers … In addition, a struggling global economy and competition from man-made fibers underscore the challenging landscape facing cotton demand.”
Growers pressed without success last year for USDA to declare cottonseed eligible for the subsidies offered to grain and soybean farmers. The 2014 farm law created a separate, insurance-like subsidy program for cotton.
Exports are key for U.S. growers because 70 percent or more of the crop is sold to foreign buyers. Campiche estimated 12.8 million bales of the forecasted 16.8 million-bale crop would be exported and 3.4 million bales would be consumed by domestic mills, resulting in an increase of 898,000 bales in U.S. stockpiles projected for 4.8 million bales when this year’s crop is ready for harvest.
Futures prices averaged 70 cents per pound during the Cotton Council survey of growers, making cotton potentially more profitable than corn, said Campiche. In filling out survey forms, growers penciled in more cotton and less corn, as well as some reduction in wheat plantings.
World cotton production is forecast for 105.6 million bales this year, slightly larger than the 2016 crop, said Campiche, with cotton usage exceeding production. But the world market would grow by only 1 million bales, limiting the opening for U.S. exports.
The Cotton Council outlook differed from the International Cotton Advisory Committee, an intergovernmental body, that forecasts a 7-percent increase in U.S. cotton production this year as part of a 2-percent increase in the world crop.
In its forecast, the Cotton Council said growers planned 10.8 million acres of Upland cotton, up 8.8 percent from 2016, and 266,000 acres of Pima cotton, up 37 percent. With 12 percent land abandonment and an average yield of 830 pounds an acre, the harvest would be 16 million bales of Upland and 760,000 bales of Pima. By comparison, the 2016 crop averaged 855 pounds an acre, the highest yield since 2012. The farm-gate price for cotton languished at little better than 61 cents a pound for two years before improving to the forecast 69 cents a pound for the 2016 crop.