Cotton acreage in the U.S. was already on track to be historically low in 2015, even before torrential rains across much of the Southwest began to dampen planting opportunities.
Cotton prices have been locked in a tight trading range throughout 2015, one that did not encourage an excess of cotton to be planted across the Cotton Belt. Then, a confluence of poorly timed rain and constrictive planting deadlines for insurance purposes served to further reduce plantings. The Texas Coastal Bend region in particular lost a significant percentage of its potential acreage.
USDA’s June 30 planted acreage report will supply a clear picture of just how much acreage was lost due to Mother Nature’s whims during planting season. Some existing projections expect that report to reveal U.S. acreage has fallen all the way to 9.1 million acres in 2014. This would represent a significant drop off from earlier projections from the National Cotton Council (9.4 million acres) and the Cotton Grower acreage survey (9.7 million acres).
Ultimately, 2015 could surpass 2009 as the year with the fewest planted cotton acres in America in the last 30 years. You’d have to go back to 1983 to find a year when Americans planted fewer cotton acres. An optimistic farmer – one who succeeded in getting his cotton planted this year – might be inclined to ask, then, ‘Will this decline in planted acres offer some price release sometime soon?’
“I think that what happens in the U.S. is still important and still influences the market,” says Dr. Don Shurley, Extension economist with the University of Georgia. “But I think you have to look at it in regards to what’s going on everywhere else globally. For example, we’ve got, as everyone knows, a record amount of stocks. “So there’s enough cotton on hand out there—granted there are questions about the quality of it, and there’s questions about whether or not China’s really going to use it—but we’ve got a full year’s worth of use of cotton out there that is inventory or stocks left over from previous years,” Shurley says. “Given that fact, what happens here in the U.S., and other countries as well, may not affect the market as much as it would otherwise.”
Shurley is quick to point out that there is no guarantee the Chinese will have an appetite for the stocks they have laid over from previous stocks. The global cotton community is left to speculate about the fiber quality of cotton that has been sitting in reserve for multiple years.
Though the market reaction to declining U.S. acreage will be muted due to global reserves, Shurley doesn’t expect the market to ignore the American planted acreage numbers altogether.
“I think the market will react somewhat if our number comes in less than the (USDA projected) 9.55 million acre number that we had back in March,” Shurley says. “I do think the market will react to it if we come in, say, another quarter of a million acres less than what we think we’ve got.”
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