Plagued By Drought and High Input Prices, Cotton Acres Could Crumble This Year
Texas Cotton 032923
USDA is set to release its March Prospective Plantings report on Friday, which is the industry’s first official look at U.S. crop acres for the year. An area known as the largest cotton patch in the U.S. is seeing another year of relentless drought, and with fields resembling the Dust Bowl, prospects for this year’s crop are dwindling by the day, as is the outlook for this year’s cotton acres.
Brad Heffington farms in Littlefield, Texas, which is just northeast of Lubbock. He’s just five weeks away from what should be the start of planting season for cotton, but now farmers in this area aren't sure if they’ll even be able to grow a crop on their parched dryland acres.
“I've got cottonseed booked, I've got corn seed booked and I've got grain sorghum seed booked, and I don't know what we’re going to plant,” Heffington says.
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Reuters’ pre-report trade estimate has U.S. cotton acres at 11.2 million acres. That’s a sharp drop from last year when farmers planted 13.7 million acres.
The National Cotton Council’s planting intensions survey, which is a grower survey done in February, also showed farmers planned to plant 11.4 million acres of cotton, which is 17% lower than last year’s number. Their survey showed the biggest hit to acreage would come from Texas, where growers surveyed showed a 21.2% drop in cotton acres this year.
“Most of the surveys that have come out so far, mainly the Cotton Council cotton grower, are above 11 million acres,” says Darren Hudson, Larry Combest Endowed Chair for Agricultural Competitiveness at Texas Tech University. “If you look at the corn:cotton ratio, which is sort of the historical benchmark that we use, it would predict more like 9.5 to 10 million acres.”
It’s no secret cotton acres could see a sharp drop, but as cotton prices drift lower, growers and economists question why simple fundamentals haven’t fueled the market this year.
“I’m a diehard cotton person, that's made our country out here, but right now the market is telling you not to plant it,” Heffington says. “And it's crazy. We don't really understand a lot of the fundamentals of it right now.”
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This week, cotton prices shot higher, with even the October and December contracts above 83¢. The reversal comes after cotton prices plummeted lower in 2022.
“This planting intentions report might move the market a little bit, but we'll see what happens, but I do think there's a number of structural issues on the demand side that are probably weighing heavy on the future expectations,” Hudson says.
