July 1, 2010
The market perspective for the 2010/11 season includes a substantial increase in cotton acreage from a year ago, a larger world crop, fairly stable demand, and lower prices. Price moves in the U.S. will be tied mainly to yearly changes in foreign production, supplies, demand for American cotton, and trade policies. Prices will likely change faster and greater than in the past.
With cotton price some $100 per bale higher than a year ago, U.S. growers have planted 10.9 million acres of all cotton, according to the June 30th USDA planted acreage report. That is up 19.2 percent from 9.15 million last year. Assuming below average abandonment around 6 percent and a high yield of 880 lbs. per acre (record 879 lbs. in 2007), a 19.0 million bale crop is possible with 18.0 million likely. As a result, tight stocks are expected to ease and price decrease substantially by this fall. It appears that the December ’10 futures price has peaked in the high 70 cent level. Many producers wisely implemented their marketing plans when December futures was above 75 cents.
Upland planted area is estimated at 10.7 million acres, up 19 percent from 2009. Planted acreage is expected to increase in all states except Louisiana, where acreage is the same as last year’s record low of 230,000 acres. American Pima cotton growers planted 209,000 acres, up 48 percent from 2009.
Export Market Strong
Foreign acreage is also expected to increase and reduce their dependence on U.S. cotton slightly. Yet, the U.S. export market is expected to remain strong
Texas, with 5.7 million acres, is up 14 percent. The state’s crop is off to an excellent start. Dryland cotton acreage is doing well and irrigated cotton is outstanding. Abandonment, so far, is very low. The Texas crop has an 8 to 9 million bale potential. Crop conditions are mostly good in the Southeast, Delta, and West.
because foreign ending stocks are the lowest since the 2003/04 crop.
In 2009/10, the foreign shortfall between production and consumption increased over 10 million bales from 2008/09 to a record 22.3 million bale deficit. The deficit for the new crop is projected to be 18.6 million for a two-year shortfall of over 40 million bales. Export shipments in the last five years (2005-2009) have averaged 13.9 million bales per season. In June, exports of 13.5 million bales from the new crop were estimated. Already, export sales for delivery from the 2010/11 crop at 2.3 million bales is more than double sales at this time last year, indicating that shipments may exceed the June estimate