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US cotton sowings to prove amongst lowest on record

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It is not just in China, where cotton plantings are to hit their lowest since the 1940s this year, that cotton plantings are testing historic lows.

The swing by US growers to soybean plantings will take an even bigger chunk out of cotton area than had been thought, according to Informa Economics.

That said, it is too early yet to say whether that means a downbeat cotton harvest too.

Swing to soy

Informa data published on Thursday continued to show the main swing to soy coming from corn.

The analysis group estimated US corn sowings this year at 88.737m acres – some 460,000 acres below the US Department of Agriculture forecast restated on Tuesday in the benchmark Wasde crop supply and demand report.

Although an improvement in planting conditions has allowed a sharp acceleration in Midwest corn sowings this month, most commentators believe some corn area was lost earlier this month in the South East thanks to persistent rains which prevented fieldwork.

Meanwhile, Chicago futures have continued to incentivise farmers to plant soybeans rather than corn, with a much-watched ratio between November soybean and December corn futures topping 2.50 earlier this month, well above a neutral level seen by the market at about 2.0-2.25.

Third lowest ever

Indeed, soybean sowings will set a record this year by even further than the USDA forecasts, according to Informa, which pegged US plantings of the oilseed at 87.185m acres.

That is 2.55m acres above the USDA forecast, and would represent a jump of some 5m acres year on year.

Much of that will come from sowings of cotton, which competes with soybeans for land in the southern US, and for which Informa pegged plantings at 9.334m acres.

Besides being a drop of 1.7m acres year on year, that figure is 215,000 acres below the official estimate.

And it would represent the third lowest figure for cotton area – pima and upland combined – on records going back to 1910.

US growers in 2009 planted 9.25m acres of cotton, and in 1983 only 7.93m acres, according to the USDA.

'Water makes a crop'

Nonetheless, it is early yet to get downbeat on prospects for production of a crop for which abandonment rates are highly variable, being grown in an area which has proved prone to drought in recent years.

On a five-year average 21% of cotton is abandoned, although the proportion has varied widely from 2.3% in 2010 to 36% in 2011.

"Plantings may be down due to lower prices but this can be offset to a large degree by higher yields and lower abandonment," said veteran soft commodities analyst Judith Ganes-Chase.

"It is not just the amount of seed that goes in the ground that is important but the yardstick that is key is what comes out."

Across most of the key cotton growing states, "farmers have plenty of water this year and water makes a crop," she said, foreseeing potential for US cotton harvest forecasts to be "tweaked upwards in the months ahead".

By Mike Verdin

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