SAN ANTONIO, Texas—The amount of land in the U.S. dedicated to planting cotton this spring is expected to surge 14%, according to a closely watched forecaster.
With cotton prices hitting new post-Reconstruction Era highs last week, the amount of land planted with cotton is expected to surge in the U.S. this spring. Here, cotton bolls in Tranquility, Calif.
The National Cotton Council of America, an industry group, said on Saturday it estimates farmers will plant 12.5 million acres of cotton. As a result, the fall harvest is pegged at 19.2 million bales, an increase of 900,000 from the 2010 harvest. The amount of cotton in one bale is enough for about 1,200 T-shirts, according to the council.
Cotton prices last week hit new post-Reconstruction Era peaks as supplies remain tight because of adverse weather conditions in large consuming and exporting nations. Cotton hit an intraday record of $1.8122 a pound on the ICE Futures U.S. exchange before selling off to end the week at $1.6786 a pound. Cotton futures are up 16% this year.
"Certainly the cotton market is sending a signal for more acres," said Gary Adams, the National Cotton Council’s vice president. "But as you well know, the corn market is trying to hold on to those acres. [There’s] a similar story in soybeans. The competition is out there."
Surging prices for most agricultural commodities are pointing to a more pitched battle for acres. Despite cotton’s highs, this year’s estimate is still short of the record 16 million acres harvested in 1995-96.
A bumper cotton harvest in the U.S., the world’s No. 1 exporter, could damp rising prices. However, replenishing global cotton stockpiles will require more output from other countries as well as restrained demand from China, the world’s biggest consumer thanks to its enormous textile industry. The council predicts inventories at the end of the marketing year in July will be at their lowest in half a century.
The National Cotton Council estimates indicate the biggest increases in acreage will come from North Carolina, Virginia and Texas.
"The prospective yields in Texas could well be affected by the drought that winds its way through the cotton belt from Texas to Georgia," said Mike Stevens, an independent cotton analyst.
Texas, which is prone to far more water shortages than the Mississippi Delta and eastern states, could see its crop hurt by drought. Texas accounts for half the cotton grown in the U.S.
"We’re excited about the higher prices," said Jimmy Dodson, a producer in Robstown, Texas, who plans to increase cotton acreage by 15%. Previous price spikes were "too short-lived to give us a signal to respond to. Now we can give a real response."
Many cotton farmers pre-sold their current crop for half of the price of the commodity now.
Some say cotton-planting intentions may be even higher than the NCC’s estimate, as the survey was conducted in mid-December and early January, before recent price spikes.
The most widespread crop switching is likely to occur in the Southeast and Mississippi Delta states, and the decision will be based on individual farms’ investments over the past several years, said Leslie Meyer, an agriculture economist at the U.S. Department of Agriculture.
"Many producers in the Delta region have made equipment and storage investments that have to be considered when contemplating switching back and forth," Leslie Meyer said in an e-mail.
The USDA is scheduled to release its planting-intention report in late March.