Will the Cotton Blanket Cover 12M-plus Acres in 2022? Ask La Niña
Don’t expect the dizzying heights of $1.21 per pound, but the cotton outlook appears relatively solid for 2022. Bouncing up from 11.2 million planted acres in 2021, the Cotton Belt could see 12 million acres in 2022, and possibly more, contingent on a mercurial La Niña.
Fueled by a COVID clampdown and release, cotton’s amazing run from the 50-cent basement in 2020, to a pinnacle of $1.21 in November 2021, bodes well for 2022, with strong prices projected on the near horizon.
Wild Card
How wide might cotton’s blanket stretch in 2022? Scott Stiles, Extension economist with the University of Arkansas System Division of Agriculture, sees 12 million acres as a ballpark figure. “Certainly, we’ve seen some backoff from the extremely high fall prices of 2021, but when you’ve still got December prices trading near 90 cents, that an historically attractive price to growers. Right now, I’d guess acres climb about 900,000 and get us back to around 12 million acres.”
In concurrence with Stiles, John Robinson, Texas A&M University Extension cotton economist, projects approximately 12 million acres—with significant upward leeway. “I think we’ll go a little over 12 million acres, and I have a big question mark over the dryness of La Niña.”
Texas, the perennial U.S. cotton giant with a footprint covering well over half of all nationwide acres each year, is currently under a La Niña advisory. Translated: Growers face drought conditions, a heavyweight concern at planting, particularly for Texas’ large percentage of dryland growers.
“When it’s this dry, and the likely insurance price for cotton is going to be comparatively high, farmers respond by planting more cotton,” Robinson describes. “They put seed in the ground and see what happens. Considering La Niña, there’s a possibility for 500,000 to 1 million more acres of cotton just in Texas. How much of that gets harvested is a separate matter, but I can certainly see how acreage numbers could go up.”
Stiles echoes concerns over dry conditions: “Talk about a wild card: The La Niña effect is very real, and prices will respond if it goes on long enough. One way or the other, that could be a driver for the market. The Lubbock area received below normal rainfall from September to November this year. December tends to be a dry month as well. The High Plains region is now considered to be in ‘moderate’ to ‘severe’ drought. The cotton market will be following this closely in the months ahead.”
Prices?
Planted acres and harvested acres often are separate topics in the Cotton Belt, and the differences frequently are not resolved until the approach of fall. A possible weather-market situation in 2022 could keep prices supported.
“There is potential for strong prices in 2022,” Robinson says, “but I think we’ll return to more of a supply-and-demand rationale for prices, which should put us in the 80s and 90s—not likely over a dollar by next harvest, but still room for strong prices.”
Cotton’s price story dates back roughly 20 months, according to Stiles, and relates to dual key factors: “First, is record world mill use. We came out of COVID, and the general economy opened, and now you see USDA projecting numbers of just over 124 million bales in mill use for the 2021 marketing year, and that’s a record. Second, if inflation is on the horizon, money tends to move into the commodity markets. Speculative money started moving to the long (buy) side of the cotton market during April 2020, when cotton was trading in the low 50-cent area. It was a bargain, and they rode it to well over a buck.”
