USDA analysts are projecting 2009 U.S. cotton plantings at 8.5 million acres, which is slightly higher than the 8.11 million acres projected by the National Cotton Council’s Annual Early Season Planting Intentions Survey, released Feb. 13.
In a report presented at the Agricultural Outlook Forum in Arlington, Va., in late February, USDA also estimated U.S. cotton production in 2008-09 at 13 million bales, compared with last season’s 19.2 million bales, the lowest production since 1989. If USDA’s acreage projection holds true, this would be the lowest planted area since 1983.
Cotton planted area fell 12.5 percent in 2008, including reductions of about 30 percent in the Delta and West, while the Southeast reduced acres by 15 percent. Most of the decrease is attributed to higher prices for corn, soybeans and wheat in combination with higher input prices that affect cotton more than most other crops.
Since the NCC survey, prices for grains and soybeans have decreased, while cotton prices have shown considerable volatility, and have recently moved lower. The fluctuations in price signals to producers, combined with uncertain weather — particularly the dry conditions in Texas — suggest greater than normal uncertainty as the 2009 planting season approaches.
Harvest futures prices in mid-February for corn were $4 a bushel and for soybeans, $9 a bushel. Those prices are below a year ago, but remain favorable relative to cotton at 50 cents per pound. While winter wheat acreage in Texas was higher than a year ago, dry conditions there may result in cotton following failed wheat if adequate moisture does not materialize.
On March 31, USDA’s National Agricultural Statistics Service will provide its first survey-based producer intentions for 2009 crop acreage.
USDA’s projected production of 13 million bales is based on average abandonment of about 9.5 percent, and a national yield of 810 pounds per harvested acre. Abandonment in 2008 was unusually high and yields were lower than in 2007 due to difficult growing conditions, especially in Texas. In addition to assumed normal weather, 2009 yields are likely to remain even with the 2008-crop yields due to proportionally larger reductions in planted area for the two highest-yielding regions, the Delta and the West.
USDA’s analysis assumes normal weather for the outlook, however, the National Weather Service’s mid-February Drought Monitor shows abnormally dry conditions in the Southeast, severe drought in the San Joaquin Valley, and abnormally dry to exceptional drought in the Southwest.
The NWS forecast is for drought conditions to persist in Texas and California’s San Joaquin Valley through the end of April. Since cotton is sometimes a preferred alternative for dry conditions, continued dryness could boost planted area, while also raising abandonment and reducing yields.
Thirteen million bales of production combined with current beginning stocks estimate of 7.7 million bales results in a U.S. cotton supply in 2009-10 of 20.7 million bales, the lowest since 1998-99.
U.S. domestic mill use is projected to rise marginally in 2009-10 to 4 million bales, consistent with the projected recovery in the domestic economy. While the long-term trend in U.S. mill use is lower, mill use will fall below trend in 2008-09 and thus could achieve a slight rebound next season as cotton use at the retail level is expected to rise.
U.S. exports are projected to decline slightly in 2009-10 to 11 million bales. The total U.S. cotton supply is projected nearly 2 million bales lower than 2008-09.
In addition, the United States is likely to lose market share as foreign suppliers such as India and Central Asia draw down the surplus stocks accumulated in 2008-09. Accordingly, the United States is projected to realize a more modest one-third share of world trade. The U.S. share of world exports is projected at its lowest level since 2000-01.
Based on these projections of supply and use, U.S. ending stocks will fall to 5.7 million bales, equivalent to 38 percent of total use, following three seasons with stocks-to-use ratios of 50 percent or higher.
With tighter stocks relative to use in both the United States and the world, the 2009-10 season average price received by farmers is forecast to rise about 9 percent to 55 cents per pound.