Cotton prices likely will be pressured for some time, and that could affect the mix of crops that Texas and other U.S. producers decide to plant next year.
Carl G. Anderson, Texas A&M cotton marketing expert, College Station, notes the world cotton supply now is at a record surplus.
"That means weak prices and likely fewer cotton acres next season," Anderson says. "The average farm price for the 2012 season was narrowed 2 cents on each end to a range of 64 to 72 cents per pound in the November USDA Supply and Demand report.
As a result, expect more acres of other crops—and less cotton in 2013.
"Because of the low cotton price relative to grain and soybeans, producers are planning to plant much less cotton acreage next spring," Anderson says. "But, due to foreign cotton producers' production costs being generally less than in the U.S., foreign acreage is likely to be reduced less than half as much as in the U.S. Therefore, cotton supplies are likely to remain excessive and price weak."
The Texas cotton crop was reduced by 200,000 bales to 5.9 million in the November estimate. However, because of improved production in the Southeast and Delta regions, the U.S. crop was increased to 17.45 million bales.
"That is a sizeable increase compared to 15.6 million last season," Anderson notes. "The world crop was raised and consumption reduced. As a result, total carryover is twice as much as needed to provide sufficient supply to textile mills."
Cotton prices were over $2 per pound in early 2011, and that powerful price set the stage for more 2012 cotton production worldwide than consumption could use at such an unrealistic high price.
Subsequently, Anderson notes, the cotton price plunged to 70 cents per pound by late spring. By November 9 this year, the Adjusted World Price had fallen to 59.98 cents per pound, the lowest since February 11, 2010.