Cotton farmers weigh weather and market

By Sarah Robinson/NEMS Daily Journal

Larry Coker grew up in a Mississippi farming family. He and his brother, Bill, farm about 800 acres of cotton near the Ellistown community in Union County.
Like many in the cotton industry, the Cokers are waiting to see how the crop will fare on the market this year.
For Mississippi farmers, weather has been a big issue this spring, forcing many to make last-minute decisions on which crops to plant. Coker said he will stick with cotton, but it takes drier, warmer weather than what the region has had for cotton to germinate.
Coker is one of a declining number of farmers in the state to plant 100 percent cotton crop amid uncertainty around prices in the upcoming year.
Based on the U.S. Department of Agriculture’s annual farm survey, the forecast for the number of acres of cotton planted nationwide this year could be down 19 percent from the number of acres planted in 2012.
Others in the industry fear the numbers could be even worse.
Based on their own survey results, the National Cotton Council of America said total cotton acreage could be down as much as 27 percent, which would be the lowest level since 1983, according to the organization’s 2013 Economic Outlook report.
Coker said rising corn and soybean prices have caused a lot of area farmers to move away from planting cotton. Because special equipment is necessary to pick cotton, it is not a crop many can easily switch to. Coker said a new cotton baler can easily cost upwards of $600,000.
Since 2007, Mississippi farmers have planted an average of 474,000 acres of cotton per year. Between 2001 and 2006, the state average was 1.29 million planted acres per year, according to the Mississippi State Farm Service Agency.
The USDA projected cotton acreage for 2013 to fall to 270,000, representing an 80 percent decline in just 12 years.
The price of corn is triple what it was 10 years ago, while cotton has seen gains of only about 50 percent since 2003. As a result, farmers who were able have transitioned their fields from cotton to corn.
“In general, what you see is farmers planting less cotton and more of other crops,” said Lance Honig, a crop branch chief at the USDA.
Since reaching a high of almost $2.30 per pound in March 2010, cotton prices have recently returned to a more stable price of about 90 cents per pound.The forecasted decrease in cotton production is due in part to a decline in cotton consumption per person in the U.S. due to competition with less expensive man-made fabrics like polyester.
Another factor looming over the cotton market is whether or not China, the single largest producer and purchaser of cotton in the world, will release a portion of its government-owned reserves.
The Chinese government purchases cotton from its own growers for 40 to 50 percent above the world market value and sets it in reserves. Chinese cotton millers then buy cotton off the world market.
Carol Skelly, a cotton analyst with the USDA, said that while it appears China plans to maintain its reserves for now, “that could change at any time without warning.”
Skelly said most analysts believe China is holding such large cotton stores to protect prices for its producers, whose incomes have been hurt due to rising labor costs.
China is the largest purchaser of U.S.-grown cotton, buying more than 50 percent last year.
Skelly said, “The five year average appears to be 35 to 40 percent.” Since Aug. 1, China has purchased 42 percent of all U.S.-grown cotton.
Skelly said the International Cotton Council is watchful and generally agrees that China selling off its reserves would cause prices to fall dramatically.
Coker said not knowing what China will do is definitely a concern to him. He said after so many years of farming, he has seen hard times before.
He remembered a particular bank going bankrupt years ago that cost several of his neighbors an entire year’s yield. Having survived a number of ups and downs over the years, Coker said, “The Lord looked after us.”
sarah.robinson@journalinc.com