USDA released its Prospective Plantings report. U.S. farmers say they intend to plant 6.7 percent more cotton than last year. Acreage is expected to be up in 10 of 17 states and two of the four cotton-producing regions. The fact that acreage is expected to be up is not a surprise.
But let’s examine the acreage numbers more closely.
Cotton acreage looks to rebound in the Mid-South. After significant declines in recent year, softening corn and soybean prices will shift some acreage back to cotton.
The Southwest will be down due to a significant reduction in California acreage due to drought.
Texas acreage will be up about 600,000 acres. This is less than the earlier National Cotton Council estimate and less than the word received from folks on the ground there.
Farmers in the Southeast say they will plant 2.4% less cotton this year. The Georgia number at 1.35 million acres is less than National Cotton Council’s February number.
There’s good reason to believe that actual acreage planted may end up higher than the 11.1 million acres. Cotton prices have improved somewhat since the survey period. This may coax a few more acres from corn and soybeans.
But, the big factor and unknown, especially in the Southeast, is peanuts.
According to the report, farmers intend to plant 230,000 acres more peanuts in Georgia (up 53 percent), up 25,000 (18 percent) in Alabama, up 10,000 (7 percent) in Florida, and up14,000 (17 percent) in South Carolina. This expected large increase in Georgia peanut acreage is the main reason why Georgia cotton acreage is expected to be down rather than up.
This increase in peanut acreage is likely in response to the farm bill PLC Reference Price and likelihood of peanuts being planted on Generic Base and eligible for any PLC Payment. I believe the “fever” has since subsided and peanut acreage could decrease and cotton increase.
New Crop Dec14 futures continue to hold in the 79- to 80-cent range.