2016 Acreage Preview: Cotton Farmers Adjust Acres in Response to Market

June 28, 2016 04:00 PM
 
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It wasn’t hard to see the cotton industry felt down in the dumps this past winter. The U.S. was coming off its lowest cotton acreage in 30 years, exports were at their lowest in 15 years, and cotton prices were at the lowest they had been since 2009.

Industry optimism has rebounded a bit since then. In fact, cotton acres will likely increase in 2016 compared to 2015, according to Jody Campiche, vice president of economics and policy analysis with the National Cotton Council of America (NCC).

According to NCC's own surveys, acreage numbers by state and region offer very mixed outlook, however. In the Southeast, a 5.1% acre decrease is expected for 2016 as farmers swap out cotton for a variety of other row crops. Florida and Alabama could see an increase in cotton acres, however, and farmers move away from peanuts, wheat and soybeans in those states. Every other U.S. cotton production region could see modest to major acreage gains. The Mid-South could see a big bump--24.9%--in cotton’s favor. That’s 1.2 million more acres than in 2015. The Southwest is expecting a 6.1% increase. And in the West could see a big increase of 24.4% more acres in 2016.

Add it all up for an estimated 8.9 million acres, or 5.7% more acres across the Cotton Belt than in 2015, again according to NCC. 

That's lower than USDA's Prospective Plantings report, which in March said that farmers intended to plant a total of 9.35 million acres. 

 

USDA released its cotton prospective planting report in March. © Christopher Walljasper/Farm Journal

 

What happened? According to Campiche, the differences between the USDA and NCC acreage estimates can be explained by timing and market conditions. Cotton farmers have the ability to plant a wide variety of other row crops and become “savvy shoppers” as they plan for the upcoming season, and cotton prices were relatively better when the USDA survey was conducted.

But both surveys point to more acres with no expectations for higher commodity prices or lower production costs.

Because of that, Campiche says it’s important to look at the economic factors that are driving these acre gains compared to last year. That varies region to region, she says. The boost in Texas, for example, is largely driven by a large acreage increase in south Texas, where flooded-out fields were never planted in 2015.

“In the West, the increase in acreage is driven by increased water availability as well as weakness in other commodity markets,” she says. “In the Mid-South, lower prices of competing commodities is the main factor driving acreage.”

The Mid-South is also coming off record low cotton acreage in 2015, Campiche adds.

“In addition, the Mid-South region is more responsive to changes in relative prices of competing crops due to the favorable growing conditions and high yield potential for a variety of crops,” she says.

But the optimists still have room to argue the glass is half-full. Earlier in June, eligible farmers got the chance to apply for the Cotton Ginning Cost-Share program from USDA Farm Service Agency, which will provide an estimated $300 million in total assistance payments.

FSA Administrator Val Dolcini says payments will begin later this summer. “We think this program is a way to provide meaningful, targeted, timely assistance to our nation’s cotton producers,” he says. “Some people don’t fully appreciate the cost of farming. This is a means of providing safety net support that benefits all Americans, really.”

 

2016 Acreage Previews

Sorghum: Watch for a Drop in Sorghum Acres

Wheat: Wheat Acreage to Hold Steady as Yield Hits Record

Cotton: Cotton Farmers Adjust Acres in Response to Market

Corn and Soybeans: Coming Soon

Hay: Coming Soon

Rice: Coming Soon

 

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