Texas cotton growers face poor prices amid high domestic and foreign production, coupled with weakening demand, said a Texas A&M AgriLife Extension Service expert.
John Robinson, Ph.D., AgriLife Extension cotton marketing specialist, College Station, said low cotton prices and unfavorable market conditions are making the 2019 growing season a difficult one for Texas producers.
Cotton futures have settled around 65 cents per pound since September after dipping below 60 cents per pound earlier in 2019, Robinson said.
Robinson said this decline followed two years of good prices for Texas growers. Cotton prices experienced some upticks this season but were still not at a profitable level for many Texas producers.
According to AgriLife Extension planning budgets, producers in most areas of Texas need cash prices to be at least 70-75 cents per pound to cover their costs.
“That’s just higher than where we are at pricewise right now,” he said. “There may be some opportunities for some increases, but market indications show even more downward pressure on 2019 cotton prices.”
Market forces
Trade with China continues to add uncertainty to U.S. cotton prices, but other market forces have been working against cotton. Good prices in 2017 and 2018 led to expansion of cotton acres, and a boon harvest nationally resulted in ample supplies amid already low prices.
Meanwhile, economies around the globe, including the U.S., have slowed, meaning less demand for textiles, Robinson said.
China continues to purchase some U.S. cotton despite a 25% tariff, but Brazilian cotton has taken a bite out of historic U.S. market shares there, Robinson said.
Robinson said resolution to the U.S.-China trade dispute might cause a price increase, but supply and demand levels likely indicate a significant rally will not come.
“Economic projections show slowing, and generally that means cotton prices will decline as well,” he said. “Excess supplies, lower prices and lower demand make marketing for 2019 difficult.”
Robinson said there could be a silver lining to low prices this season for Texas cotton growers – fewer acres nationally in 2020. Production could be down more than 3 million acres in other parts of the country as growers look to more profitable crop options like corn or soybeans.
U.S.-China trade will factor into soybean acres, but Robinson believes lower cotton supplies in 2020 could initiate the price rally Texas growers need to turn a profit.
“There’s really not much positive to look at this year, but there might be an opportunity in ’20,” he said.
AgriLife Extension district reporters compiled the following summaries:
CENTRAL: The district experienced its first frost with temperature lows in the low- to mid-20s. Rain helped wheat and oats. Producers were finishing planting oats and wheat. Pastures were in poor condition due to the dry conditions. Livestock were in good to fair condition with supplemental feed. Significant rainfall was needed to replenish stock tanks. Nearly all counties reported short moisture levels.
ROLLING PLAINS: Conditions were cool and wet. Wheat emergence slowed, and producers slowed plantings as they waited on moisture. Some cotton producers were in the process of defoliation and others started stripping. Supplemental hay feeding continued for stockers waiting to graze wheat.
COASTAL BEND: The district received widespread rainfall, as much as 5 inches in some areas. Temperatures dropped, and several areas reported their first frost or light freeze of the year. Most fieldwork was on hold due to wet conditions, while drier areas continued to work fields to prevent boll weevils. Producers were making plans to fertilize as soon as conditions permit. Pasture conditions improved with recent rainfall, but some areas continued to feed hay and protein. Some late hay harvest activity was reported. Livestock remained in good condition, and producers were keeping local auctions busy with weaned calves and cull cows.
EAST: First frost hit about two weeks earlier than normal. Many producers started feeding hay due to a drastic drop in temperatures and recent rainfall. As much as 3.5 inches of rain was received by some areas. A few producers continued to cut hay. Winter forages were planted and growing well. Pasture and rangeland conditions were fair. Subsoil and topsoil moisture levels were adequate. Livestock were in fair to good condition. Anderson County reported local cattle markets were up, while Shelby County reported a significant price drop. Wild pigs caused widespread damage across the district. Sabine County reported wild pig populations hit an all-time high.
SOUTH PLAINS: Temperatures dipped down to 18 degrees, and scattered showers were reported. Farmers were busy stripping cotton. The early, hard freeze should help farmers use less defoliants. Rangeland and winter wheat were in fair condition. Local gins were busy, and grain elevators continued to accept truckloads of grain. Cattle were in good condition.
PANHANDLE: Temperatures dropped, and 2-5 inches of snowfall were reported. Cotton harvest stopped due to wet weather in southern parts of the district. Bolls were open in northern areas of the district. Winter wheat was planted and had emerged in most areas. Soybeans dropped leaves. Corn was in fair condition in the southeast and northeast parts of the district. Subsoil and topsoil levels were surplus. Pasture and rangeland were in fair to good condition.
NORTH: Topsoil moisture levels were mostly adequate with some counties reporting shortages. Rain and cold weather arrived with up to 1.5 inches of rain. A light freeze occurred. Some cool-season forages were emerging. Producers continued to plant winter wheat. Warm-season grasses were going dormant though there was quite a bit of standing forage in some pastures. Several ranchers reported having enough standing forage to get them to the first to middle part of December without feeding any hay. High-to-low temperature changes caused some stress in livestock. Spring-born calves continued to be weaned. Market prices remained depressed in all classes of cattle, especially for the calves and cull cows. There were still some stocker calves grazing warm-season summer grasses, but most of those were expected to go to the feedlot after the killing freeze.
Click here to see more...