More U.S. Acres, Possible Changes in China’s Cotton Policy Will Drive Market in 2014
The good news: the National Cotton Council (NCC) says U.S. cotton producers will plant 11.26 million acres of cotton this year, up 8.2 percent from 2013.
The continuing news: China’s cotton policy will continue to drive world production and prices.
The (potentially) bad news: If China reduces cotton imports as expected, U.S. cotton could find itself in a very competitive global market.
In other words, it’s almost déjà vu all over again, with gains in some areas, and increased risks in others. Yet following a better than anticipated 2013 crop, some softening in grain prices and more concrete answers about the future thanks to a new farm bill, optimism in the cotton market seems a bit brighter than a year ago.
However, according to Gary Adams, there are some trends that bear watching.
Acreage Projections Point Up
Based on the results of the NCC’s annual Early Season Planting Intentions Survey, upland cotton acres will bump up to 11.04 million acres in 2014, an 8.1 percent increase over 2013. Likewise, extra-long staple (ELS) acres are expected to show an 11.8 percent increase this year, up to a total of 225,000 acres. Overall, that should lead to an expected crop of 16.4 million bales for 2014.
As with all surveys, the results reflect a snapshot of intentions based on market conditions at survey time. Actual plantings may be influenced by changing market conditions and weather.
“History has shown that U.S. farmers respond to relative prices when making planting decisions,” said Adams, NCC vice president, Economics and Policy Analysis. “Coming off of last year’s 10.4 million acres of all cotton, the survey suggests that growers are again responding to relative prices by increasing the intended plantings. However, as the state-level results show, the increase is not universal across the states and production regions.”
Survey respondents throughout the Southeast indicated a 1.2 percent decline to 2.63 million acres. Alabama, Georgia and Virginia showed increased cotton acres, while growers in Florida and the Carolinas indicate declines due to acreage shifts to other crops.
The Mid-South showed a 12.5 percent increase in cotton acres – up to a total of 1.39 million acres – with all states except Arkansas showing projected growth.
Southwest growers indicated a 12 percent increase, bringing the regional total to 6.74 million acres. Most of the growth is coming from acres shifting back into cotton from grains. But improved moisture is also bringing some acres idled in 2013 back into production.
Western results are mixed. Growers in Arizona and New Mexico intend to plant more cotton in 2014, while California will see decreases in upland cotton acres due to water issues and competition from other crops. For the region as a whole, the survey reports projected 275,000 upland acres, down roughly 6 percent from 2013.
ELS growers intend to increase acreage by 12 percent to 225,000 acres in 2014. Some California growth is projected to come from upland acres, with sizeable increases also coming in Arizona, New Mexico and Texas.