June 6, 2012

US West Texas cotton yield likely to jump 40%

The 2012 cotton harvest in West Texas, the major producing US region, will jump at least 40% and is seen to rise twofold if precipitation gets higher, said Darren Hudson, director of Texas Tech University's Cotton Economics Research Institute.

"We're looking at a crop between 2.8 million and 3.2 million bales," Hudson said Monday (Jun 4). "If we get good rains in the next few weeks, production could go back to four million bales."

Last year, the most severe drought in at least a century decimated the West Texas crop. Output fell to two million bales, compared with an average of 4.5 million in the past 10 years, said Hudson, a cotton analyst for 12 years. A bale weighs 480 pounds.

Cotton futures in New York have plunged 69% to US$0.671 a pound from a record US$2.197 in March 2011 as global demand waned. Output in the US, the world's biggest exporter, may climb 9.2% to 17 million bales in the season that starts August 1 from a year earlier as acreage increases, the government said earlier.

"With prices at these levels, farmers will probably lose money," said Alan Underwood, the president of Underwood Cotton Co. in Lubbock. "They probably will turn to government loans and store the cotton, waiting for prices to rebound."

Production costs in West Texas indicate break-even prices at US$0.88-$0.90 a pound, he said.

"We got off to an average start in terms of plantings, but still need the rains to keep the dryland-cotton crop growing," Underwood said.

An estimated 54% of the crop in the top 15 producing states was good or excellent, compared with 57% a week earlier, the USDA said Monday.