January 5, 2012

 

US 2012 cotton acreage may drop 15%

 

 

US 2012 cotton plantings are likely to fall 15% to about 12.5 million acres although the final figure will depend a great deal on cotton and rival grains prices, as well as on weather uncertainties, a top Monsanto official said.

 

"Cotton acres are going to be down," David Rhylander, the marketing lead for Monsanto's wholly owned cotton seed firm Deltapine, said on Tuesday (Jan 3) at the start of the annual Beltwide cotton conference.

 

Monsanto is one of the world's top seed companies and is a dominant force in the cotton market.

 

Rhylander said their estimate is for 2012 US cotton sowings of 12.5 million acres, down over 15% from last year's plantings of 14.72 million acres.

 

The Monsanto official said the critical question is what will happen during the spring with the price of cotton compared to the price of competitors for farm land especially soybeans, corn  and wheat. March cotton futures on Tuesday closed at US$0.9580 per lb.

 

"That's the tradeoff you're looking at on the economic side," Rhylander said.

 

Some farmers and analysts feel it would be tough for cotton to compete for acres if soybeans stays at US$11.50 a bushel or higher or if corn fetches a price of US$6-plus bushel an acre.

 

Cotton futures had a roller coaster ride in 2011, hitting an all-time record high of over US$2.20 per lb in March of that year.

 

However, the market ended 2011 as the weakest-performing commodity in 2011, losing over a third of its value from end-2010 levels, Thomson Reuters data showed.

 

Most analysts who follow cotton said it would need a price of at least US$0.90 for farmers to stick with cotton.

 

Rhylander said another key question is what happens in Texas, the biggest cotton growing state in the United States, which was hit last year by its worst drought in a century.

 

There are worries over Texas because the La Nina phenomenon which caused the drought is still around, although its strength is much reduced.