March 29, 2012

 

US farmers to plant 13% less cotton

 

 

Farmers in the US Delta and Southeast will plant about 13% less cotton this year brought about by higher prices of soy and corn.

 

A Thomson Reuters survey showed on Wednesday (Mar 28) that American farmers will sow 12.74-12.76 million acres of cotton in 2012, a decline of 13.3-13.4% from the 14.72 million acres planted last year.

 

In early February, industry group National Cotton Council had forecast plantings at 13.63 million acres.

 

The USDA will release its annual potential plantings report for major crops on Friday at 8:30 a.m. EDT (1230 GMT). Participants in the survey said cotton would lose acreage to rival grains and soy because those commodities were fetching higher prices.

 

"Cotton just doesn't stack up at these prices," said Lou Barbera, a trader at VIP Commodities.

 

USDA normally conducts its survey for the plantings report by March 1. On that day, the price of the new-crop November soy futures contract in Chicago was last done at US$12.94-1/4 per bushel while new-crop December cotton futures traded at US$0.9088 a pound.

 

November soy closed Tuesday at US$13.27-3/4. In contrast, December cotton has barely budged from the start of the month when it traded at US$0.9048.

 

"Soy and grains are more attractive than cotton at US$0.90," said Peter Egli, director of risk management at Plexus Cotton Ltd.

 

Sharon Johnson, senior cotton analyst at Penson Futures in Atlanta, said farmers were switching back to soy after a year of high volatility in the cotton market.

 

"In the Southeast and Delta, producers are moving back to grains and soy after two difficult years with yields or marketing of cotton due in large part to the extreme volatility associated with last year's record high prices," she said.

 

The USDA outlook meeting last February had projected US 2012 cotton plantings at 13.2 million acres.

 

A Reuters' survey in January showed the industry had expected US 2012 cotton sowings at 13.002-13.242 million acres.