Yes, We Were Too Low…And Happy To Be
June 30, 2010 The headline for my On the Square column in January asked: “Is Our Survey Low Again?”
Based on the Cotton Grower annual survey, sent to growers in October and November, cotton acreage was projected at 9.9 million acres. I ended by saying, “My first wish for 2010 is that we’re reaching the point where cotton is competitive enough to be back in the crop mix. My second wish for 2010 is that the grower survey is a million acres too low.”
Babaloo. According to USDA, the survey was exactly 1 million acres low – USDA pegged 2010 planted acreage at 10.9 million. Quite frankly, I took a shot in the dark. I had nothing whatsoever to base my wish on, other than optimism that I had been picking up in the field.
In 2009, the survey was also low by about a million acres. But our survey is the first of the season, and the past two years have been anything but ideal during harvest. We think growers were in a foul mood both years. What mattered to them was getting the current year’s crop harvested, rather than thinking a year ahead
Okay, so here’s a projection for 2011: 11.5 million acres … please make it low by 1 million acres again.
I also got my first wish, although it was a shot in the dark, as well: At the time I wrote the column, the ICE December 2010 contract was at 74 cents-per-pound. It dropped to 68 in February, but has been on the rise again. Right now it appears that resistance is at 80 cents.
One surprise to me was Louisiana, but it was mild because the whole industry was looking for another drop. The state stayed flat at 230,00 acres, which is historically low. Another surprise, I thought, was Arkansas, which came in at 530,000 acres – I hoped it would be closer to 600,000. I’d been hearing that Georgia had “found” (that was the word used) another 100,000 acres. It did, going from a USDA-projected acreage in March of 1.15 million acres, to a planted acreage of 1.25 million.
So we continue to look ahead with optimism: We have a higher planted acreage number than expected, the stocks-to-use ratio is the lowest since 94/95 (12.86 percent) … and dropping. When this marketing year ends on July 31, USDA projects that we’ll have 2.9 million bales in inventory – a stocks-to-use ratio of 16.67 percent. By the end of the next marketing year, inventory is expected to drop to 2.8 million – a 16.67 percent stocks to use ratio.
From here on this year, it’s the weather market that everyone has been saying it would be. Any threat to this year’s crop could send the market spiraling higher. With a higher planted acreage, good weather could send it lower. I continue to believe there’s more upside than downside, but buckle your seat belts and be prepared.
For comparisons of all state-by-state projections, see: www.cotton247.com/acreage.
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