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Cotton holds promise, just on fewer acres
MISSISSIPPI STATE -- Cotton offers strong profit potential for growers even though it no longer rules as king among the state's row crops.
In 2008, two crops are posting more acreage in Mississippi than cotton's predicted 420,000 acres: soybeans, with 2.05 million acres, and corn, with 670,000 acres. Exceptionally strong markets have lured growers away from their reliable favorite and over to grain crops.
Cotton offers strong profit potential for growers even though it no longer rules as king among the state’s row crops.
“Cotton should be a profitable crop this year, just not as profitable as some of the other crops,” said Steve Martin, agricultural economist at Mississippi State University's Delta Research and Extension Center.
Last year, cotton prices averaged 47.8 cents per pound. This year, December futures prices are near 80 cents per pound during the first week of May.
“With our carryover of 10 million bales, we would not have 80-cent cotton if it weren't for the national acreage reduction,” Martin said. “Even on reduced acreage, we will produce more cotton than we use domestically, which is about 4.5 million bales.”
The United States exports about 14 million bales annually. Total U.S. production last year was about 20 million bales. A smaller carryover is expected next year, which should inspire growers to return to their first love, cotton.
Martin said weather in west Texas will dictate to what degree cotton supply is reduced within the next cropping year.
“Those growing cotton this year should not be in any hurry to price it, as weather scares throughout the growing season will likely result in price spikes. The downside risk is probably now less than upside potential,” Martin said.
MSU Extension cotton specialist Darrin Dodds said Mississippi's cotton is behind schedule because of the cool, wet weather. The U.S. Department of Agriculture's weekly crop report released May 4 by the National Agricultural Statistics Service indicated that Mississippi's cotton is 14 percent planted, compared to the five-year average of 54 percent.
“Fewer acres for the state mean we will be able to get planted quickly when field conditions improve,” Dodds said.
“The cotton that is in the ground is not growing very fast because of weather conditions,” Dodds said. “That increases the chances of diseases, but most have had seed treatments to offset the risk.”
The USDA report indicated that 5 percent of the cotton has emerged, compared to the five-year average of 28 percent.
Dodds said the significant reduction in cotton acres brings infrastructure concerns, including the impact on gins.
“It's hard to gauge what will happen,” Dodds said. “Some gins that were open last fall may not open this year. If there are not enough acres in the area to run, they won't run.”