Battered by drought and rising costs, U.S. cotton growers will devote more of their land to corn, wheat, and soybeans — crops that promise higher revenue this year — while sharply reducing their cotton plantings, said a survey released on Sunday. The National Cotton Council said its survey of growers indicated 11.4 million acres will be planted to cotton this spring, 17% less than last year.
“The U.S. cotton industry continues to navigate an environment characterized by increased production costs, slumping consumer demand, and supply chain disruptions,” said a Cotton Council summary of the economic outlook for this year. “The current economic signals are reflected in the 2023 survey results as many growers indicated a shift away from cotton to other competing commodities.”
Growers across the Cotton Belt said they would shift some of their land out of cotton. Corn, wheat, and soybeans were the most frequently mentioned alternatives. Futures prices for most alternative crops were strong for the past year but cotton futures have fallen more than 16% since last winter.
“History has shown that U.S. farmers respond to relative prices when making planting decisions,” said Jody Campiche, Cotton Council vice president for economics. “Price ratios for cotton to corn or soybeans are at the lowest level since planting of the 2009 crop. In addition, production costs remain elevated.”
The Cotton Council survey of growers in 17 states, conducted from mid-December through mid-January, is closely watched as an early indicator of farmers’ plans for the new year. The first survey-based estimate from USDA will be the Prospective Plantings report on March 31. The Cotton Council released its survey results at its annual meeting in Dallas. Cotton is one of the four most widely planted U.S. crops.
In Texas, the No. 1 cotton-producing state, growers said they would plant 6.2 million acres of cotton, a 21% reduction from 2022. Growers abandoned nearly three-quarters of their cotton land because of drought damage last year. Texas still harvested more cotton, 2.08 million bales, than its nearest competitor, Georgia, with 1.28 million bales.
Economic conditions should improve by the time this year’s crop is harvested, said Campiche. World demand for cotton is expected to rise 5%, and China’s removal of Covid-19 restrictions should provide a boost to cotton consumption, she said. China is one of the world’s largest cotton importers.
The Cotton Council estimated a U.S. cotton crop of 15.7 million bales this year, roughly 1 million bales larger than last year. American cotton mills were expected to expand production somewhat while exports decline modestly during the 2023/24 marketing year with the result that the U.S. cotton stockpile would climb by 1 million bales, to 5.3 million bales in summer 2024.
Actual plantings may be different than the survey indicated because of changes in market conditions or unusual weather at planting time, said the Cotton Council. There also are “several downside risks,” including high inflation, tighter monetary policy, the war in Ukraine, Covid-19 impacts in China, slower economic growth, geopolitical tensions, and slower world economic growth.
Comments