Barring the unexpected, a big acreage change doesn’t appear on tap for U.S. cotton as the farm bill looms large in 2018.
Cotton covered 12.6 million U.S. acres in 2017 and analysts don’t expect much deviation in 2018. However, wild cards may be in play prior to spring planting, and the farm bill remains an area of major concern for the cotton industry.
“The farm bill is the first thing that comes to my mind,” notes Don Shurley, Extension cotton economist with the University of Georgia. Ongoing industry efforts aim to extend the CGCS (Cotton Ginning Cost Share) program for either the 2016 or 2017 crop, he says: “Efforts also continue to have cottonseed considered an oilseed and eligible for PLC under Title I of the current farm bill. Industry leadership is also pursuing ways to get cotton back in Title I beginning with the new farm bill in 2019.”
Other significant issues, according to Shurley, include weed control options and basis/fiber quality. Over the last several years, basis has been strong for good color and long staple. “It means extra money in a producer’s pocket and makes cotton more profitable. Cotton demand and use is recovering, and the U.S. export market share has increased. We need these things to continue,” he explains.
What about 2018 U.S. cotton acreage? Jody Campiche, vice president of Economics and Policy Analysis for the National Cotton Council, expects total upland and ELS numbers to closely mirror the 12.6 million acres of 2017, but says it’s too early to draw a concrete estimate.
In the Southwest, projected cotton prices are still better than weak corn and wheat prices. In the Mid-South and Southeast, cotton is the more attractive alternative, but if prices drop in the next few months, cotton could lose acreage to soybeans, Campiche explains. In addition, the current large peanut supply could translate to additional cotton acres. Record-breaking yields in several states in 2017 could also trigger more cotton.
“A change in cotton policy could also impact acreage,” she says. “If cottonseed is included as a covered commodity prior to the 2018 farm bill, generic acres would be converted or reallocated and this could affect planting decisions, particularly for crops planted on generic base. However, overall impacts would be modest.”
Echoing Campiche, Shurley also estimates 2018 acreage will closely match 2017: “Right now, I don’t expect a significant change in cotton acres unless December futures drop below 70 cents or go to 73-75 cents and stay there.”
Any market wild cards for 2018? Shurley says India’s production and export levels could be market factors, in addition to the possibility that China may eventually loosen import caps. Also, Shurley believes cotton use is a definite wild card: “After a few years of a slow recovery, cotton use has increased more markedly for the 2016 and 2017 crop years. The 2017 crop ended up larger than most thought it would be and prices have held because of demand growth and strong exports. Will use continue to improve?”
Overall, cotton looks to hold tight to 2017 acreage numbers. “With the exception of 2011, which is an outlier due to the high price situation, acreage hasn’t been above 12.6 million since 2006,” Campiche concludes. “Given the current fundamentals, I’m not expecting a large increase or decrease as we have had in recent years.”