Expect a Big Cotton Crop for 2019
The 2019 planting season for cotton is likely to look similar to 2018, with farmers seeding 14 million acres of the crop across the Cotton Belt, according to John Robinson, professor and Extension economist-cotton marketing with Texas A&M AgriLife.
“We have a really good chance of having a 21-million-bale crop,” he predicts, adding that he anticipates having 4.3 million bales from 2018 to carry over into the new year.
“That means we’ll have at least a 25-million-bale supply, and I think that’s low,” he notes. “It’ll probably be more like 26 million.”
By comparison, the National Cotton Council estimates the 2018 U.S. crop will total 19.8 million bales. Mill use is forecast to be 3.4 million bales, while exports are forecast to reach 15 million bales. The estimated total offtake is 18.9 million bales. Beginning stocks of 4.3 million bales would result in ending stocks of 5 million bales on July 31, 2019, and a stocks-to-use ratio of 26.5%.
Robinson says two key factors are likely to contribute to a big 2019 crop: poor prices for corn, soybeans and peanuts, which will drive farmers to plant more cotton, and abundant rainfall, thanks to the forecast of El Niño conditions by the NOAA (National Oceanic and Atmospheric Administration). NOAA predicts a 70% chance of wetter-than-normal conditions this winter through next spring.
Strong early-season crop growth would mean farmers would abandon fewer cotton acres next year. Between 12% and 15% abandonment is common in the South and Southeast, and 40% to 50% abandonment in Texas is not unusual, Robinson says. He anticipates total abandoned cotton acres next year will be in the neighborhood of only 10%.
The expectation for a big crop signals the likelihood of weaker prices in the year ahead, which could impact the futures market as early as April or May when WASDE numbers are confirmed by USDA.
“I believe we’ll have futures falling all the way into the 60s, if that happens,” Robinson says. Future prices were in the mid-70s as of press time, and Robinson urges cotton growers to start locking in prices for a portion of their crop now.
O.A. Cleveland, professor emeritus of agricultural economics, Mississippi State University, agrees.
“A December 2018 futures price at 80¢ and/or a December 2019 futures price above 80¢ both plead with you to begin or add to your price fixing,” Cleveland says. “If one has not fixed any 2018 crop, then it is time to price at least 50% of expected production. Ditto the 2019 crop!”