USDA Projects 13.2 Million Cotton Acres for 2012

Cotton Field

The early USDA projection for 2012 U.S. cotton area is 13.2 million acres, a decrease of about 10% from last year, due mainly to lower cotton prices and relative net returns that favor shifts to alternative crops. The early projection is from USDA’s World and United States Cotton Outlook Forum and was released on February 24.

USDA’s first survey of producer planting intentions — Prospective Plantings — will be conducted in early March and published on March 30, 2012.
The analysis quantifies the effects of relative crop prices and soil moisture conditions in the Southwest (where drought conditions generally favor cotton), based on U.S. area response for the 2002-2011 period. The main variables are ratios of cotton to corn and soybean prices (using averages of fall futures prices for the February-March period preceding planting each year) and an index of soil moisture on the Texas High Plains as of June 1. For 2012, soil moisture is projected to be below average but improved from the extreme drought of 2011.

The projection is above the level of 12.3 million acres indicated by statistical analysis, but below the results of the recent National Cotton Council (13.5 million acres) and Cotton Grower (12.9 million acres) surveys. The analysis quantifies the effects of relative crop prices and soil moisture conditions in the Southwest (where drought conditions generally favor cotton), based on U.S. area response for the 2002-2011 period. The main variables are ratios of cotton to corn and soybean prices (using averages of fall futures prices for the February-March period preceding planting each year) and an index of soil moisture on the Texas High Plains as of June 1. For 2012, soil moisture is projected to be below average but improved from the extreme drought of 2011.

Respondents to the Cotton Grower and NCC surveys reported that the decreased cotton acreage in the Southeast will be replaced with corn, soybeans and peanuts. In the Delta, corn is overwhelmingly expected to replace the acres moving out of cotton. The survey indicated that wheat acreage — along with other crops, like sorghum — is replacing cotton in the Southwest, while wheat and specialty crops increase at cotton’s expense in the West.

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