Southeastern cotton growers had a good crop in 2009, though as much as 20 percent was likely lost to late season rains. Similar weather problems hampered cotton production in other areas of the world.

With demand for cotton products weathering the economic recession as well or better than most consumer goods, reduction in world stocks of cotton over the past two years is likely to drive cotton prices up for the 2010 crop.

Cotton growers from California to the Carolinas planted slightly more than nine million acres in 2009, down 3.5 percent from 2008. As much a 15 percent of the crop was abandoned — in large part to record rainfall from the middle to traditional end point of cotton harvest in the Southeast and Mid-South.

What started out to be a great crop in the Southeast, especially in the upper Southeast, was significantly reduced by heavy rainfall. Mike Griffin, who farms about a thousand acres of cotton near Suffolk, was still picking cotton well into January. He says he expects to lose about 15 percent of the crop to the wet conditions.

Some of the abandoned acreage came in southwest Georgia where several tropical weather fronts dumped more than 20 inches of rain during what should have been peak harvest season.

While weather related yield cutbacks created sporadic economic problems for farmers in the Southeast, these woes did further reduce the total amount of cotton available in the world and will likely contribute to higher prices for the 2010 crop.

Because of the delayed harvest, total U.S. production is difficult to determine, but should finish up around 12.5 million bales.

On a global basis cotton production is expected to be down almost five million bales. Small gains in production in South and Central America are more than offset by China’s decline in cotton production of over five percent.

In addition to supply driven price improvement, the steady increase in cotton prices in 2009 are in part due to continued lowering of the U.S. dollar value, a general upturn in the economy and tighter balance sheets by textile mills worldwide.

Speaking at the recent Beltwide Cotton Conference in New Orleans, National Cotton Council Economist Gary Adams says cotton demand for the 2010 crop will be determined in large part by the extent to which the economy continues to improve. The latest projections from the International Monetary Fund call for the general economy to expand by three percent in 2010.

“The economy appears to be in recovery, but there are still concerns that the recovery will be slow. Consumer spending will likely be restrained as confidence remains low, unemployment remains high and the U.S. housing market continues to struggle,” Adams says.

“Mill use is expected to make a comeback to more than 114 million bales in 2010, after sharp drops in usage for the 2008 and 2009 crops. The combined drop in global production in 2009 and increase is mill use could create the first significant drop in stocks since the 2002 marketing year,” he adds.

Exports remain the lifeline of U.S. cotton growers. Domestic mill use continues to decline and will likely come in at something close to 3.4 million bales. Three countries — China, Mexico and Turkey use nearly half of all the cotton produced in the U.S.

The most serious threat to U.S. cotton exports is India. Recent mechanization and wide-scale adaptation of modern technology has pushed India’s per acre yield up dramatically. Though mill use has increased in India over the past few years, it has failed to keep up with cotton production.

The Indian government increased support prices in 2008 and 2009, reducing their competitive trade advantage, resulting in lower export numbers. However, recent changes in price support structure will make Indian cotton more competitive on the world market and put them in direct competition with U.S. cotton growers.

In the U.S., cotton should be well positioned to compete price wise for acreage with grain crops, rice and peanuts. Spring weather, price structure for other crops and myriad other factors will determine whether the expected price advantage for cotton over other crops will actually equate to increased cotton acreage.

“The recent rise in prices has placed cotton in a more competitive position than anytime in the past three years. Historically, when world prices have approached current levels, growers in other countries responded with increased cotton acreage,” Adams says.

In the Southeast, cotton look like a good option, compared to grain crops and peanuts. Price will be a major determining factor as growers try to balance escalating input costs with projected yields and higher cotton prices than in recent years.

e-mail: rroberson@farmpress.com