What is in this article?:
• Cotton prices may not have to fall to extremely low levels to discourage acreage in 2013. High corn and soybean prices are taking care of that problem, as wholesale shifts to those crops are expected.
• Significantly reduced acres is exactly what the cotton market needs next year, according to experts, as cotton supplies have soared to record levels.
As grain and soybean prices rise to the roof, 2013 cotton acreage appears headed for the cellar, according to analysts speaking at the Ag Market Network’s July conference call, broadcast from New York City.
“I can’t think of anybody right now who would plant cotton unless they owned a gin. As far as the price structure is concerned, cotton is not even competitive,” said Mike Stevens a market analyst based in Mandeville La.
In the Southeast and Mid-South, “anything less than a dollar a pound for cotton is not going to draw much interest,” said O.A. Cleveland, professor emeritus, Mississippi State University. “With soybeans at $17 and corn at $8, you’re going to see wholesale switching to soybeans and corn.”
Acreage losses in Texas will not be as significant, according to Carl Anderson, Extension professor emeritus, Texas A&M University. “I would think we would go from 6.8 million acres to as low as 5.5 million acres.”
Jarral Neeper, president of Calcot, Bakersfield, Calif., said “70-cent cotton just won’t work. Land rents are rising now due to alternative crops. Fertilizer prices have not come down much at all. There are just too many alternatives in California for producers to not look at other things.”
Of course, 2013 cotton acreage needs to come down anyway, as cotton ending stocks for this marketing year are projected at 72 million bales, an all-time high, and cotton consumption has declined around the globe.
Fortunately for those who do plant cotton, as long as grain and soybean prices remain high, cotton prices will not have to fall to discourage acreage, noted Joe Nicosia, CEO of Allenberg Cotton Co.
“We’re going to be able to create a production deficit (in cotton) next year without the pain,” Nicosia said. “Normally it would take 50-cent cotton to solve this surplus problem. Now cotton is still profitable (in the world), and alternative crops are extremely profitable. This will allow the world to have a cotton production deficit in 2013 and begin the process of working off the huge carryovers without a massive price drop.”