July 5, 2011
The June 30, 2011 USDA acreage estimate of 13.7 million acres of all U.S. cotton was on the upper end of expectations. However, total U.S. harvested acres are expected to be less than the 10.7 million harvested under favorable growing conditions last year.
Texas acreage was increased from March intentions by one million acres to 7.1 million -- the largest acreage since 1981. Because of prolonged exceptional dry conditions in Texas through June, some 3 million of planted dryland acres is expected to fail due to lack of moisture. Yields on irrigated and remaining non-irrigated land will be well below average.
During the first half of 2011, rainfall across cotton areas in Texas has totaled around 1 to 2 inches. The six-month rainfall is much less than in the drought years of 1998, 2006, and 2008. In 1998, 41.6 percent of the planted acreage was abandoned mainly because of dry and hot weather. This year abandonment will likely exceed 45 percent. Lost acreage in 2006 was 36 percent and in 2008, 35 percent.
The Texas Crop Condition Index reported by USDA is less than 40 percent and lower than the drought years of 1998, 2006, and 2008. However, the irrigated crop could improve with some timely rains and moderate temperatures in July and August. The 2006 and 2008 crops did improve in late summer and early fall. In contrast, the 1998 crop condition did not improve, and the season ended with the highest abandonment rate (41.6%) in recent times.
Assuming roughly 2.5 million acres irrigated and around 1 to 1.5 million of the 4.6 million dryland harvestable, the Texas crop could be in the 4.0 to 5.0 million-bale range. That compares to 7.8 million in 2010/11 planted on only 5.55 million acres.
The intense dry conditions also reach across Alabama, Georgia, Louisiana, Missouri, and Oklahoma. Lost acreage will be above average for these states as well. The U.S. abandonment of planted acreage might exceed 26 percent, the largest in recent decades.
Given the adverse weather conditions of drought, floods, high winds, blowing sand, hail and record temperatures, the U.S. crop, at this time, appears to be in the vicinity of 16.0 to 16.5 million bales. That compares to 18.1 million in 2010/11, 12.19 in 2009/11, and 12.82 in 2008/09. Average yearly production for the last 10 years is 18.35 million bales.
Because foreign demand for cotton is soft, production in Brazil and Argentina is good, and manmade fiber prices are lower than cotton price, physical demand for cotton is weak. December ’11 futures may have a struggle to remain over $1.00 per pound this fall.