Cottonseed Production Projected Up, With Strong Prices

For the first time in three years, U.S. cotton acreage is expected to increase. While the anticipated boost in cottonseed supplies would suggest more attractive cottonseed prices for dairy producers this fall, experts are mixed on where end-of-season prices could land.

Larry Johnson of Cottonseed LLC, La Crosse, Wis., expects strong cottonseed prices, despite increased acres this growing season. Tight cottonseed supplies and strong milk prices, he says, are key reasons he doesn’t foresee additional downward pressure on new crop cottonseed prices, especially given that new crop cottonseed is currently discounted up to $150 per ton compared to old crop cottonseed prices. “However, if milk prices fall, cottonseed prices could parallel the drop.”

The U.S. Department of Agriculture (USDA), World Agricultural Supply and Demand Estimates report, released May 9, 2014, shows the 2014 anticipated crop at 11.1 million acres, an increase of 700,000 acres, or 7 percent, compared to last year. The 2014 crop is forecast to produce 14.5 million bales, netting about 4.9 to 5.0 million tons of cottonseed, compared to 4.203 million tons in 2013 – more than a 10 percent increase.

As always, Texas weather conditions will impact cottonseed prices. Texas A&M University Professor and Extension Specialist Economist of Cotton Marketing John R.C. Robinson says The Lone Star State is expected to plant 58 percent of the nation’s cotton crop in 2014.

“Northwest Texas is still dry, which tends to encourage cotton planting vs. corn, wheat or grain sorghum,” Robinson says. “Additionally, cotton prices for 2014-15 are still competitive, relative to competing crops in Texas.”

“Many variables between now and harvest will impact the final production figure,” Johnson adds. “Rainfall, particularly in Texas, and abandoned cotton acres are the main factors to watch.”
About 25 percent of the 2013 cotton crop was abandoned, primarily due to drought conditions.

As of May 18, 46 percent of the 2014 U.S. cotton crop had been planted, according to the USDA, National Agricultural Statistics Service Crop Progress Report. This compares with 48 percent, the five-year average.

Dairy producers’ demand for cottonseed remains strong, says Johnson. “Cottonseed is being fed at higher rates, due to the 2012 drought, 2013 (alfalfa) winter kill and the long, hard winter of 2013-14. These three scenarios hampered forage availability, creating increased appeal for whole cottonseed, which combines protein, fiber and energy, and works well with other ration ingredients to deliver a balanced and cost-effective ration.”