NCC: Cotton acreage may increase due to weak prices for other crops
Farmers may increase their acreage devoted to cotton in 2017 even though prices are low and export demand bearish because prices for other crops are also weak and there are improved expectations for water, the National Cotton Council said in releasing its economic outlook at its annual meeting in Dallas.
In her analysis of the NCC Annual Planting Intentions survey results, NCC Vice President for Economics and Policy Analysis Jody Campiche said the NCC projects 2017 U.S. cotton acreage to be 11 million acres, about 9.4 percent more than 2016.
With abandonment assumed at 12 percent for the U.S., Cotton Belt harvested area totals 9.7 million acres. Using an average U.S. yield per harvested acre of 830 pounds generates a cotton crop of 16.8 million bales, with 16 million upland bales and 760,000 extra-long staple bales.
But Campiche added, “It is important to note that although the survey results suggest an increase in acreage, the increase in cotton acreage is largely the result of weaker prices of competing crops and improved expectations for water. For the past three years, U.S. cotton producers have struggled with low cotton prices, high production costs and the resulting financial hardships. While current futures markets have increased since last year, many producers continue to face economic challenges.”
World consumption of cotton is expected to exceed production in 2017, which normally would lead to higher prices. But the implications for the coming year “may not be as clear cut as stocks outside of China are projected to increase by 3 million bales for the 2017 marketing year,” Campiche said.
“The majority of the global stocks decline is due to China’s reduced inventories. While China’s increased consumption of reserve stocks has bolstered mill use in 2016, it also has curbed China’s demand for imported cotton fiber and cotton yarn.”
Campiche noted that export markets continue to be the primary outlet for U.S. raw fiber.
In recent years, U.S. export customers have changed with a significant reduction in exports to China. However, reduced exports to China have been partially offset by increased U.S. exports to Vietnam.
For 2016, the NCC estimates U.S. exports at 12.8 million bales, up 39.3 percent from 2015.
If the current pace of sales and shipments is maintained, the strong demand for high-quality cotton could push the U.S. export number even higher.
The U.S. will remain the largest cotton exporter with a market share of 35.8 percent as compared to 26 percent in 2015. While world trade increased slightly in 2016, the gain in U.S. market share largely is attributed to supply issues in other major cotton exporting countries.