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US Cotton Planted Acres to Shrink, Unseated by Corn, Gro’s Model Forecasts

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US acres planted to cotton will contract this year as growers shift to corn, according to early estimates generated by Gro’s Planting Intentions Model for US Cotton. In 2022, Gro’s US Cotton Planting Intentions Model’s acreage estimates were within 98% of the USDA’s March 31 Prospective Plantings report, as our latest Performance Report on Gro Yield Forecast Models and Acreage Models shows.

Commodity prices are a key input into farmers’ growing decisions. Currently, the price ratios of cotton to corn and soybeans are at their lowest level since 2012, indicating that growing corn could be more profitable. 

The price ratios between cotton and corn (orange line) and cotton and soybeans (blue line) are at their lowest level since 2012. Relative strengths among commodity prices are a key input into farmers’ choices of which crops to plant. 

While cotton prices have declined 48% from the 10-year high reached in May, the prices for other commodities, like corn and soybeans, have fallen by less. Inflationary pressures and concerns that the US could tip into a recession this year are also likely weighing on US cotton growers’ planting decisions. Clothing, a key consumer of cotton, is considered a discretionary item that is prone to cutbacks, if consumers curtail their spending. 

Gro’s Planting Intentions Model for Cotton allows users to project how much crop will be available in the coming year based on producers’ planting intentions. 

Cotton acres are among the most likely to be abandoned by farmers later in the season, which could further reduce the 2023/24 harvest. Last year, amid prolonged drought, the US cotton crop had a 43% abandonment rate, the highest on record. Over the past 10 years, growers on average abandoned 20% of their cotton acres, a move taken when a crop is deemed uneconomic to harvest. 

By late May, before US cotton planting is completed, Gro’s Normalized Difference Vegetation Index (NDVI), a measure of plant health, can provide directionality on end-of-season US cotton abandoned acres and therefore prices, according to a recent Gro analysis of 20 years of Texas’ cotton abandoned acres data and NDVI data for the state. The US is the third-largest cotton producer globally, and last year Texas planted nearly 60% of the US crop. 

However, a crop yield similar to last year’s 30-year high of 975 lbs/acre is needed to further alleviate pressure on the US and global stocks-to-use ratio. Current stocks to use in the US are sitting at 30.4%, up from 22.4% last year, but still well below 2019/2020 levels. Further, last year’s cotton yield needs to be taken with a grain of salt as the yield was flattered by an unusually high abandonment rate; only the highest yielding acreage was harvested.  

Gro’s US Planting Intentions Models final planted acres estimates are released in early March, about three weeks before the USDA’s March 31 Prospective Plantings report. Our US Planting Intentions Models and the Gro Climate Risk Navigator for Agriculture, which can be used to monitor cotton growing conditions, among many others, are available with a Premium subscription.

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