Most cotton economists and industry leaders expect a drop in cotton acres in 2012, and you agreed. According to the annual Cotton Grower survey of growers, 12.904 million acres of cotton will be planted in 2011. That’s down from USDA’s final figure of 13.725 acres in 2011, but is still the second largest acreage figure since 2006, and well above 2009’s number of 8.9 million.
Upland acres are expected to drop from 13.436 million to 12.636 million acres. American Pima acres are projected to increase from 289,000 in 2011, to 300,000 this year.
The Southwest will continue to claim over half of the Upland acres planted with 53% of total acreage in the U.S. Acreage numbers from Texas, by far the largest cotton-producing state, were all over the board, with a projected low of 5.6 million to a high 7.5 million. Of course, the continuous drought in Texas is the cause of so much uncertainty.
Georgia, the number two cotton-producing state, will see a drop from 1.45 to 1.383 million acres. There is very little uncertainty in this case, due to peanut prices soaring from around $550 per ton in 2011, to as high as $1,200 for 2012.
In the Southeast, thanks to a jump in acreage in North Carolina, acreage will be up slightly from 2.86 million in 2011, to slightly less than 3 million this year. North Carolina will increase acreage from 760,000 to 785,000, due in large part to dropping corn yields versus higher cotton yields.
The Mid-South will see a drop from 2.33 million acres in 2011 to 2.248 million. Acreage drops will be seen in Arkansas, Mississippi and Tennessee. Louisiana will increase acreage, while Missouri is flat.
The Cotton Grower survey is conducted from October to November and is released at the Beltwide Cotton Conferences in January. It is followed by the National Cotton Council’s acreage projection released at its Annual Meeting in February, and USDA’s in March.
As with most of the U.S.-grown commodities, price is the single most important factor in planted acreage. After reaching a high of $1.18 per pound last April, the December 2012 contract on the New York Cotton Exchange has fallen to less than 90 cents. Adding to the drama, new-crop corn and soybean prices have also dropped on the Chicago Board of Trade. Corn for delivery in December of 2012 reached a high of $6.50 per bushel, but has lost nearly $1 per bushel. Soybeans for delivery in November of 2012 have lost nearly $2 per bushel after reaching a high of $13.50.
There is a distinct advantage for peanuts in the Southeast. In the Mid-South, soybeans appear to hold an advantage over both cotton and corn, simply because cost of production is lower. Both cotton and corn will see prices for 32% nitrogen double from $200 per ton in 2010 to $400 per ton last October. On the other hand, prices for whole cottonseed for feed have increased from slightly over $150 per ton, to $400 per ton in areas where hay availability has been hammered by drought. Can they eventually pull up the price of fiber?
But as the largest consumer of cotton, demand in China raises or lowers all cotton tides.