Citing Prices, National Cotton Council Forecasts Lower Cotton Acreage

Citing Prices, National Cotton Council Forecasts Lower Cotton Acreage
Feb 14, 2023

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By Chris Clayton

Facing higher production costs, slumping consumer demand, and supply chain disruptions, the National Cotton Council forecast Sunday that at least some cotton acreage will shift to other, more profitable crops.

U.S. cotton growers will plant 11.4 million acres, down 17% below 2022 acreage, the NCC stated based on a survey of early planting intentions released at the cotton council's annual meeting.

Still, production could be higher than 2022 if cotton production hits its five-year average per acre.

In its examination of the cotton industry outlook for 2023, the cotton council cited production costs remain high, but cotton futures are currently 16.5% lower than a year ago while prices for other commodities remain relatively unchanged.

"The current economic signals are reflected in the 2023 survey results as many growers indicated a shift away from cotton to other competing commodities," NCC stated.

"History has shown that U.S. farmers respond to relative prices when making planting decisions," said NCC's Vice President of Economics and Policy Analysis Jody Campiche. "Relative to the average futures prices during the first quarter of 2022, cotton prices are lower while the prices of most competing commodities are relatively unchanged. Price ratios of cotton to corn and soybeans are at the lowest level since planting the 2009 crop. In addition, production costs remain elevated."

DTN Lead Analyst Todd Hultman points out that spot cotton prices have fallen from over $1.50 a pound last May to roughly 85 cents per pound today "and have lost producer confidence that prices will be profitable in 2023." Hultman added, "In January, we saw USDA's estimate of winter wheat plantings increase roughly 3.3 million acres for the new season and new-crop milo prices in Wichita, Kansas, are going for over $7 a bushel."

Hultman added, NCC's 11.4-million-acre planting estimate for 2023 is down from 13.76 million acres in 2022. "That's a reasonable estimate, possibly even still a bit high with other drought-tolerant choices available in 2023," he said.

Using the five-year average state-level yield per harvested acre, NCC forecasts a 2023 cotton crop of 15.7 million bales, with 15.2 million upland bales and 466,000 extra-long staple (ELS) bales. That would still top the 14.7 million bale crop for 2022, according to USDA's National Agricultural Statistics Service Crop Production report.

Cotton acreage in 2022 was 12.5 million acres, up 11% from 2021's acreage. Upland cotton is the dominant crop at 12.3 million acres. American Pima cotton was 156,000 acres last year.

NCC's survey showed farmers in Texas, the country's largest cotton-producing state, would cut cotton acreage by 21.2%. If that holds, Texas cotton acreage would dial back from 7.1 million acres last year to about 5.6 million acres, which is more in line with 2021 planting numbers, according to USDA's NASS.

NCC also cited estimates of overall acreage declines in the Southeast with 12.9% lower acreage in Alabama, 25% fewer acres in North Carolina, 27.9% fewer acres in Florida, but just 1.1% lower acreage among Georgia farmers.

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