Shurley on Cotton: USDA Planting Intentions In; Time for Market to Focus on Other Realities
March 31, 2015 By Dr. Don Shurley
Today’s (March 31) USDA Prospective Plantings report estimates that U.S. farmers intend to plant 9.55 million acres of cotton this year – down 13.5 percent from last year. This (9.55 million acres) is within the range of most pre-report expectations, but on the higher end of that range.
The National Cotton Council’s survey estimate back in early February called for a 14.6 percent decline in acres. At the USDA Outlook Forum in February, their estimate was down 12 percent. Most pre-report expectations were for a drop of 12 to 15 percent.
Some of the numbers in today’s report are a bit puzzling, but it is what it is. The Georgia estimate (down 20 percent) is a bit much. The increase in peanut and soybean acres don’t nearly fully account for the drop in cotton and corn acres – unless acreage is going to be left idle, and that’s a distinct possibility.
The market must now turn its attention to other matters. Today, new crop Dec15 futures are bumping 65 cents. We’ve visited this neighborhood before. Are prices going to trek even higher, and if so, when? If not, what’s the downside risk?
Reports are that corn planting is delayed in the Mid-South, and the planting window may be closing. Corn planting may also be delayed in some areas here in the Southeast. Will this acreage get planted to corn or switch to other crops such as cotton or soybeans? Could actual acreage planted to cotton be more than today’s number? As we move forward, market direction will focus on actual plantings and crop conditions.
Price direction will also focus on China acreage and production and their purchase of imports from the U.S. and elsewhere. Chinese acreage and production is widely expected to be down significantly. U.S. exports have been good, and China continues to buy.
Downside risk appears to be limited – not non-existent, but limited. A larger number in U.S. cotton acreage could provoke some downward pressure on price. But depending on China and other foreign production, it could provide larger export supplies and exports – especially of higher quality fiber.
2015 U.S. Cotton Planting Intentions and Comparisons
20131 20141 20152 Change3
AL 365 350 300 -14.3%
FL 131 107 90 -15.9%
GA 1,370 1,380 1,100 -20.3%
NC 465 465 375 -19.4%
SC 258 280 235 -16.1%
VA 78 87 85 -2.3%
TOTAL SOUTHEAST 2,667 2,669 2,185 -18.1%
AR 310 335 230 -31.3%
LA 130 170 130 -23.5%
MS 290 425 350 -17.6%
MO 255 250 175 -30.0%
TN 250 275 170 -38.2%
TOTAL MID-SOUTH 1,235 1,455 1,055 -27.5%
KS 27 31 24 -22.6%
OK 185 240 260 8.3%
TX 5,809 6,217 5,715 -8.1%
TOTAL SOUTHWEST 6,021 6,488 5,999 -7.5%
AZ 162 165 115 -30.3%
CA 280 212 155 -26.9%
NM 43 48 40 -16.7%
TOTAL WEST 485 425 310 -27.1%
TOTAL U.S. 10,408 11,037 9,549 -13.5%
1/Actual acres planted. Thousand acres.
2/Intentions, USDA – 3/31/2015. Thousand acres.
3/2015 from 2014
Shurley is Professor Emeritus of Cotton Economics, Department of Agricultural and Applied Economics, University of Georgia
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