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Cotton fights back in US battle for acres


What difference has the agricultural commodities market retreat made to prospects for the 2021 US spring sowings programme?


Actually, not much for grains themselves, when it comes to the incentives that new crop futures prices are offering farmers as they begin to plan crop acreage allocations.


Prices of corn, soybean and spring wheat have fallen pretty much in sync over the past week.


That means little difference to price ratios between crops, and so little change in the relative allure of these crops.


Cotton’s comeback

But one crop which is improving its appeal is cotton.


Cotton was on Friday worth 4.10- times as much as soybeans on a new crop basis - up from 3.86 times at the close of last week, and indeed the highest ratio of the year so far.


An improved pace of US shipments - largely to the key market of China, whose economic growth data this week beat expectations – downgraded US 2020 crop ideas, and worriers over farmer fatigue at a succession of storm-hit crops appear to be prompting the fibre to spruce up its act, or risk being marginalised in 2021.


Corn vs soybeans

Indeed, IHS Markit late on Thursday estimated US cotton sowings this year at 11.52m acres – down 1.54m acres from its forecast a month ago, and a drop of 574,000 acres year on year.


Corn and soybeans, by contrast, were seen as picking up acres.


That said, a forecast for corn sowings of 94.24m acres, an eight-year high, may prove optimistic without a decrease in the relative appeal of soybeans, at a 2.6:1 new crop price advantage, or at least benign planting conditions that see farmers able to maximise area in cultivation.



New crop futures price ratios
Soybeans vs corn
Cotton vs soybeans
Spring wheat vs corn

January 22 (mid-session)

2.59 4.10 1.45

January 21

2.60 4.06 1.47

January 20

2.61 3.99 1.46

January 19

2.61 3.92 1.45


January 14

January 14

2.61 3.85 1.44
January 13 2.59 3.92 1.43
January 12 (day of USDA Wasde, grain stocks, winter wheat sowings reports) 2.57 3.94 1.40
January 11 2.62 3.98 1.42
December 31 2020 2.56 4.04 1.43
November 30 2020 2.55 4.07 1.44


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