REPRESENTING COTTON GROWERS THROUGHOUT ALABAMA, FLORIDA, GEORGIA, NORTH CAROLINA, SOUTH CAROLINA, AND VIRGINIA
COTTON MARKETING NEWS
Volume 17, No. 4
201919
Sponsored by
Market Improves But Future Unknown as Planting Approaches
In my previous (March 14) comments to you, the title was “Cotton
Continues to Need Clarity”. I’m not sure much has changed in that
regard. The market has certainly made nice improvement,
however, and we can be thankful for that. There is still no word
or advance in trade talks and the March 30th Prospective Plantings
report, in my opinion, threw more uncertainty on the market.
But to be sure, there is always uncertainty surrounding the March
number because so many things can change that ultimately
determine what farmers will plant. Last month’s Prospective
Planting estimate was 13.78 million acres. This compared to an
earlier National Cotton Council estimate of 14.45 million acres and
most industry estimates of over 14 million—some quite a bit over
14, but less than 15.
April 11, 2019
The first USDA estimate of acres actually planted is released at the
end of June. The June estimate has been higher than the March
number in 2 of the last 3 year. Actual acres planted (the final
number) has been higher than the March number and the June
estimate for each of the last 3 years.
Looking overall at just the 17 reported cotton-producing states
only, corn is expected to gain acres while cotton, grain sorghum,
are expected to lose acres.
In the grand scheme of things over all cotton states, peanuts may
not be significant—but they are in several states and can equate
to as much as ½ of the cotton acres. As a side note, I find it
surprising that peanuts are projected to be up. Contract prices
certainly don’t justify that and the industry and most observers
are saying that acreage needs to decrease, not increase.
Most continue to believe that acres planted will be 14 million or
more. With models predicting above normal precipitation, we
could be looking at a crop of around 22 to 23 million bales or
more—roughly 4+ million bales higher than last year.
Note that most of the improvement in prices came before the
lower than expected March number. Exports and shipments have
been good. This market is set up to move higher or have a
downward correction. Where does a grower get started on
pricing to reduce some of the downside risk while still leaving the
upside open? To each his own, but the 78-cent neighborhood
seems a reasonable start to me.
Cotton Economist- Retired
Professor Emeritus of Cotton Economics