US farmers will raise their cotton sowings by more than
900,000 acres this year, encouraged by higher prices, according to industry data
which underlined too expectations of growth in soybean plantings.
US growers will plant 11.02m acres of the fibre this spring,
a rise of 9.4% year on year, the National Cotton Council said, following a farm
Sowings at this level – which would complete a recovery from
the 8.58m-acre figure recorded in 2015, the second lowest on data going back
more than a century – reflected the encouragement of higher values, which have
been supported by firm demand for US exports, amid a squeeze on Indian
"History has shown that US farmers respond to relative
prices when making planting decisions," said Dr Jody Campiche, the NCC's vice-president,
economics and policy analysis.
During the survey period, in December, cotton futures "averaged
70 cents per pound, which is higher than year-ago levels.
"Corn prices were lower than year-ago levels," although
soybean prices "were about 12% higher".
In fact, with New York cotton futures appreciating further
since, adding some 8% so far this year to stand amongst their highest levels in
six months, plantings may even end up higher.
"If the survey were conducted today, given current cotton-competing
crop price ratios, and the current projected level of [US Department of
Agriculture] revenue insurance guarantees, we would expect the figure to be
300,000-500,000 acres higher," said Louis Rose at the Rose Report.
However, cotton futures - which have been buoyed by strong US exports of the fibre, and fund buying which has lifted the net long in New York derivatives to a record high - rose further nonetheless in early
gains in New York, adding 0.7% to 76.32 cents a pound for the March contract.
Many observers had talked ahead of the NCC report of a large
rise in US cotton area this year, with analyst Judy Ganes-Chase last week saying
that "US cotton planting could be up at least 10%".
Furthermore, the NCC flagged that the rise in plantings need
not be reflected in production – saying, indeed, that next year's US harvest
could fall despite extra seedings, assuming levels of abandonment return to
normal levels from the low level of 5.5% recorded last year.
"Planted acreage is just one of the factors that will
determine supplies of cotton and cottonseed," Ms Campiche said.
"Ultimately, weather, insect pressures and agronomic
conditions play a significant role in determining crop size."
Factoring in a more typical figure of 12% for the abandonment
rate, and an "average" yield of 830 pounds per are for yield "generates a
cotton crop of 16.8m bales".
That would represent a decline of some 200,000 bales in
output year on year.
Cotton vs grains vs soybeans
The data come amid a growing focus on prospects for US
sowings of crops such as cotton, corn and soybeans which compete for area in
spring plantings programmes in many areas – and with more area potentially up
for grabs after declines in wheat seedings in the autumn.
Indeed, in Texas, the top cotton-growing state, Oklahoma and
Kansas, a cotton sowings rise averaging 10.7% was expected to come largely at
the expense of wheat, with corn acreage seen suffering too.
However, the NCC survey also flagged the lure of soybeans
too, which are expected to pull some acres from cotton in some south eastern
states, such as North and South Carolina.
And in the mid-South, "in all states except Mississippi,
soybean acreage is expected to increase".
Growers in the region, which also includes the likes of
Arkansas and Missouri, "have demonstrated their ability to adjust acreage based
on market signals, in particular, relative prices of cotton and competing crops".