Cotton Acres Could Plummet Next Year

November 26, 2012 11:52 PM
Cotton Acres Could Plummet Next Year

The bleak picture in the Texas Panhandle is too close of a reminder of the drought of 2011.

Even though the area has received more than it had just one year ago, the soil is still extremely dry.

"Generally our farmers are disappointed because of the extreme drought," said Larry Nelson, CEO Windstar Gins. "We’ve only had about 10 to 12 inches of rain in this area this year for the total, and that’s not enough."

As cotton harvest wraps up in the area, the lack of rain is creating another disappointing crop year. After 2011’s drought-stricken crop, yields aren’t what farmers like Chance McMillan had hoped.

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"It cut them at least in a third. This year we had some 1,200 pound cotton that yielded around 1,000 pounds, a good 2,000 pounds less than what it looked like," says McMillan.

"One the farms that have the capability to put 18 to 23 inches of water have exceptional yields, because it was a good hot, dry year, which is good for cotton if you have enough water," explains Nelson.

He says for the most part, however, irrigated acres suffered and dryland has been practically non-existent.

"We might have one or two field of dryland that made less than a half a bale per acre, maybe a fourth," says Nelson. "But most of our dryland was all destroyed and most of them, fortunately, we able to collect some insurance."

It’s been more than just the dry weather. As usual, Mother Nature threw in a couple other curveballs that impacted both yields and quality of this year’s crop.

"One thing we didn’t plan for was this late freeze in October," says McMillan. "This late milo and cotton, it really hurt our grades."

"What is unusual on Oct. 12, we had a bad hail storm," says Nelson. "This is after the crop is mature. Farmers lost anything from total loss to 20 percent of production, which is probably about 3,000 acres in total."

Yields have been lower than average, and so has the price of cotton. This is forcing farmers like McMillan to make a tough decision—to leave the cotton strippers in the shed next year and not plant any acres of cotton. Instead, he’ll move to all grain.

"When you put in $600 to $650 expense for cotton and you’re only getting about $500 because of low cotton prices, it doesn’t work."

"At this point, if the price relationship between grain and cotton stays the same, then we’re expecting a 40 to 50% decrease in cotton acres," says Nelson.

That would make the lowest cotton acres since Nelson started in the ginning business over 30 years ago. He says the reason is simply too much cotton in the world. With an 80 million cotton bale surplus, most of which is in China, cotton prices are suffering.

As a ginner, the low prices will hurt Nelson too.

"We have to tighten our belt," says Nelson. "We have confidence it will return, as opposed to some of my MidSouth friends. They’re losing their infrastructure. At his point, we don’t expect that, but if things don’t change, we will."

As for now, McMillan watches his wheat crop struggle and continues to hope for rain. If it doesn’t come, 2013 could be a repeat of 2011.

"If you don’t start out with anything, it doesn’t matter how much water you put on, you’re only watering the top three inches of the soil—you don’t have that deep profile," says McMillan.

McMillan says some farmers won’t even pre-water next year because the soil is simply too dry.

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