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NCC: Cotton planting likely to be down this growing season

 

By TIM THORNBERRY
Kentucky Correspondent

FRANKFORT, Ky. — With the decline in cotton prices has come talk of declines in production for this year’s crop – something that was reflected in planting intentions surveys released by the National Cotton Council (NCC).
According to information from the NCC, U.S. cotton producers intend to plant 9.4 million acres of cotton this spring, down 14.6 percent from 2014. Gary Adams, the NCC’s vice president of Economics & Policy Analysis, said history has shown farmers respond to relative prices when making planting decisions.
“Cotton growers are approaching the 2015 planting season with harvest time futures contracts at the lowest level since planting of the 2009 crop,” he explained. “After more than five years of stronger markets, cotton prices fell sharply during the second half of 2014.”
From a price standpoint, cotton is facing the same challenges as most other crops. Since July, cotton has fallen from almost 84 cents a pound to just over 68 cents. As of the close of the market day on Feb. 13, the daily price for upland cotton finished at under 62 cents.
The planting intentions surveys showed producers in the Southeast will experience a 10.6 percent decline in planted cotton, while mid-South state producers expect to drop planted acres by almost 26 percent.
Jeff Helms with the Alabama Farmers Federation said since 2001, cotton production there has seen a decline every year. “I think there is the likelihood that we’ll see further pullback this spring,” he said. “Profitability of cotton is a challenge. Production costs continue to increase and prices are not very attractive right now.”
He said because of those factors, growers must produce a crop with good yields in order to make a profit. He also said cotton is one of the more costly crops to plant on a per-acre basis.
As many farmers turn to other crops when the price of one falls, most other commodity prices have fallen as well, making those choices more difficult. For cotton producers, Helms said since many have investments in cotton-only equipment, they plant the crop anyway.
“Most of those farmers who are set up for cotton, I think, will continue to plant some cotton. They may pull back a little bit on how many acres they plant but, particularly with grain prices not a whole lot stronger, I don’t anticipate that we would see a huge swing in acreage from cotton into something else,” he said.
To put cotton production in Alabama into perspective, in 2001, 610,000 acres of cotton were planted. Since then planted acres have dropped as price and market environments have changed and as farmers have diversified their operations.
In 2013, Alabama cotton growers planted 365,000 acres, and 350,000 in 2014. Despite those drops, cotton remains a strong crop in Alabama and is second in row crop production behind soybeans.
Besides the high cost of planting, many decisions about what to plant and how much, be it cotton or corn, is linked to supplies domestically and throughout the world. China remains the U.S. cotton industry’s biggest customer and currently that country is sitting on a mountain of cotton reserves – 50 million bales. The number of bales exporting to that country is expected drop by nearly 1 million this year.
According to information from the NCC, “World cotton trade for 2015 is estimated at 34.6 million bales, up from 34.1 million in 2014 but well below the 2009-13, five-year average of 41.2 million bales. The United States is projected to capture 31 percent of world trade by exporting 10.6 million bales in the upcoming year.”
While the South will likely see moderate to substantial declines in planted cotton, the West is expected to see the largest declines in percentage. The NCC reported western cotton growers are expected to plant 46.6 percent fewer acres of upland cotton, with many in Arizona looking to switch to wheat.
In the Southwest the decline is much less, at 13.5 percent. Producers in these areas are looking to switch to an array of grain crops including wheat, corn and grain sorghum.
The planting intentions surveys serve as a glimpse into what farmers are planning to do this season, but the NCC notes “it is important to remember that the survey is a snapshot in time based on grower intentions. Changes in markets and weather will cause actual plantings to differ from early-season intentions.”
2/20/2015