It takes patience to be part of the cotton industry – no matter where you’re connected to the supply chain. For producers, that doesn’t even begin to describe the scenario they face every year. It’s one thing to plant the right seed, employ the most effective production technique and have a handle on problems such as insects and weeds. But along comes something called prices, and that can turn your world upside down if you’re trying to maximize profits.
Such is the situation that has confronted U.S. cotton for the the last three years. When the ethanol boom started back in 2007, it had an immediate impact on corn and soybean prices which soared to incredibly high levels. Thus, when many cotton producers looked at the balance sheet, they decided to make the obvious choice – moving acreage out of cotton and into other crops.
Sooner or later, those sky-high corn and soybean prices were bound to come down. And that has certainly been the case with corn, which is now in the $3.75 range. Meanwhile, along the way cotton producers learned a very important lesson. They found out that even though corn is an excellent rotation crop with cotton, there were hidden costs in corn production – storage, transportation and adequate water supplies, to name a few. Suddenly, the switch to cotton looked like the right decision for the new season.
We share all of this background information to point out how the stage was set for what economists now project as the beginning of cotton’s comeback in 2010. Not surprisingly, it also happens to be the theme of this month’s issue of Cotton Farming.
Viewed from any angle, today’s farmer has to be flexible enough to respond to market signals. When the New York cotton futures contract moves into the mid-70 cent range, decisions have to be made. Acreage shifts occur. This trend, which figures to continue through most of 2010, has had a ripple effect across the Belt.
For that reason, our staff has generated reports from the Southeast, Mid-South, Southwest and West to find out more details on why cotton acreage is increasing – and, more importantly, how can this momentum continue beyond 2010?
Our cover story on pages 10, 11 and 12 offers an overview of how the comeback is occurring, and National Cotton Council economist Gary Adams explains how this trend eventually brought us to this point. Included in this story are updates from Texas AgriLife Extension economist Jackie Lee and High Plains producer Ronnie Hopper.
Southeast Editor Amanda Huber examines why cotton acreage is increasing in Georgia, the second-largest cotton production state in the Belt, as well as other parts of that region. Senior Writer Carroll Smith has conferred with leaders in the Mid-South to find out why producers quickly responded to better cotton prices and made dramatic acreage shifts from corn to cotton.
Finally, even in the West where cotton acres were drastically reduced in California in 2009, there are signs of modest but significant increases. Contributing Editor Brenda Carol offers an in-depth look at why producers felt confident enough to make the switch, while having numerous options to grow other crops.
Projections and predictions are just that. They are forecasts based on how price relationships stand at the moment. Any unexpected event can change the environment quickly when you’re dealing with volatile commodity markets. However, even the most conservative economist can’t ignore these potential trends for 2010.
It’s been a long wait for producers. Now it’s time for that patience to be rewarded.
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