When cotton is picked from fields and packed in modules each fall, it contains far more than wonder fiber. Separated during ginning, colossal cottonseed mounds are transported to mills for commercial crushing. Cottonseed derivatives find their way into a remarkable array of products: cooking oil, cattle feed, electronics, food ingredients, and many more. Yet, the post-gin cottonseed industry has taken a hit with a steady drop in nationwide cotton acreage.
The vast majority of the public is unaware of an industry built around products derived from cottonseed: hulls, linters, meal and oil.
“People are always surprised by the extent of cottonseed products. There’s always a lot of education we have to do to make the public aware,” explains Ben Morgan, executive vice president of the National Cottonseed Products Association in Cordova, Tenn. “Oil and seed products primarily go into the U.S. market. Up to 15% percent of meal and seed is exported, but the rest is used domestically.”
On average, a cotton acre typically produces 1,100 lbs. of cottonseed, including these products:
- Hulls, which are are sold mainly as a roughage source for cattle, but are also used in oil drilling. (Mixed with water, hulls are pumped down oil wells to plug fractures to prevent water loss when drilling.)
- Linters, which are composed of the fuzzy fiber left on seed after ginning and used in Q-tips, paper currency, makeup, ice cream, toothpaste and LED televisions.
- Meal, which is used in cattle feed and organic fertilizer.
- Cottonseed oil, which has a high flashpoint with strong stability at high temperature and is used primarily as a cooking or salad oil. Until the 1940s, cottonseed oil was the top vegetable oil produced in the U.S.
“On a ton of cottonseed, 25% to 27% goes to hulls; about 47% is used for meal; 15% is cottonseed oil; and the balance is linters,” says John Fricke, president, Planters Cotton Oil Mill in Pine Bluff, Ark.
Cotton acreage in 2015 is predicted at roughly 9.5 million acres across the U.S., which is possibly a 13.5% decline from 2014 numbers. “The drop in cotton prices and planted acreage has affected the cottonseed products industry in a significant way. Across the industry, the amount of cottonseed crushed four years back was 2.5 million tons, but this year it might not hit 2 million tons,” Fricke predicts.
In tandem with Fricke, Morgan emphasizes current difficulties and says competition for securing seed is intense. “The drop in acres and prices has a dramatic effect on the cottonseed products industry. It seems hard to believe, but Georgia has more cotton acres than Arkansas, Mississippi and Tennessee combined. Trying to obtain cottonseed for crushing or feeding to the whole seed industry is very tough.”
Against economic thinking, the drop in cotton acreage hasn’t produced a boost in value for cottonseed. Diminished supply due to a short crop hasn’t ignited a jump in market price because cottonseed has to compete with other feed ingredients in the cattle industry. Big crops in feed grains keep whole cottonseed prices down.
With competition in abundance, the cattle industry can substitute ingredients for cottonseed and buy time. Hulls and cottonseed meal have to push for market space with other proteins. Soybean meal, canola meal, DDGS and others--cheaper products mean cattle producers have options beyond cottonseed. “Dairies don’t want to pay any more than they have to for feed prices, and they’re not going to bid up cottonseed prices if they can help it,” Morgan notes.
In the short term, protein prices are keeping a lid on cottonseed meal value, according to Morgan. Abundance of protein has created downside pressure. On the vegetable oil side, cottonseed oil is faring only slightly better. Pared down, he believes the cottonseed industry needs more product available. “We need to see overall improvements on the fiber side so growers plant more acreage.”
Does the cottonseed products horizon show tightening or relief? “I think we’re possibly at the bottom end of cotton acreage drops,” Fricke says. “After all, cotton is a commodity like the others, and the demand structure will dictate price. Price will dictate acreage.”