Many Mid-South producers have had grain on the brain in a big way for the past few years at the expense of cotton acres.
Although farmers barely have had time to knock the dirt off their boots from the 2009 cotton harvest to make any definite plans, talk in the Mid-South among them indicates that cotton acres should at least remain steady and possibly increase from what was planted last year.
Several factors will influence the decision-making process as the planting season draws closer.
Arkansas, which is the third largest cotton-producing state in the country, reported planting 520,000 cotton acres in 2009. Fred Bourland, with the University of Arkansas Division of Agriculture, says two major factors that will influence the fate of cotton acres in his state are the price of soybeans and how to deal with the growing problem of resistant pigweed. He also points out that Arkansas has maintained about 50 percent of its cotton acreage based on the million acres that were planted in 2006.
“It seems that the overall consensus in our state is that cotton acres will not decrease any more here unless the price differentials between cotton and soybeans become even greater,” Bourland says. “If soybean prices jump up a bit more, cotton acres may decrease some, but I sense that we have already reached our base.”
Another positive indicator that cotton acres could be on the rise is that soybeans typically are not a good option in northeast Arkansas on the real sandy soils. Also, corn has been planted on silt loam soils for the past couple of years as a rotation crop, and it’s about time for that land to go back into cotton to realize rotation benefits.
“Realistically, I think it will be the end of January before we can get a pretty good idea of what farmers are thinking,” Bourland says. “On the extreme positive side, we could see cotton acres in Arkansas potentially go up 10 percent.”
Red Dec (Dec 2010) Trades High
Shane Stephens, vice president of Staplcotn’s warehouse division in Greenwood, Miss., says many farmers note that the cotton market is getting interesting – based on current futures prices – plus they need to rotate.
“A lot of producers who haven’t planted cotton in the last few years and others who have planted only a small percentage of their traditional acreage are signing up with Staplcotn to put themselves in a position to take advantage of the current futures market levels,” Stephens says. “As this market has gone above 72 cents futures to as high as 78 cents futures, more farmers are pricing a percentage of their 2010 cotton.
“Since I have been in the cotton business, we have more growers pricing some of their new crop intentions earlier than we have ever seen (November and December prior to planting),” he adds. “Historically, there have been very few times that red Dec has traded at this level, this early. Also, there have only been a handful of times that soybeans have traded at today’s levels for next year.”
Although farmers sign up cotton acres, they aren’t committed to planting until they lock in a price. The biggest factor affecting acreage in this area, Stephens says, is the relationship between cotton and grain prices.
“As time goes on in the market and a farmer has scale-up orders and locks in a good price, the more cotton acres he can commit to,” he notes.
Granted, it’s still hard to make an accurate prediction for the Mid-South, but, Dec 2010 cotton futures prices and rotation benefits appear to be in favor of an increase in cotton acres.
Contact Carroll Smith at (901) 767-4020 or firstname.lastname@example.org.