The acreage battle will be a hot topic in 2023, especially for the cotton market.
The widely watched Cotton Grower’s annual survey provide the first look of new-crop acreage intentions until the National Cotton Council Convention that is set to take place the second week of February. The survey predicts plantings of 11.57 million acres, a 2.2 million acre, or 16% reduction, with some suggesting more. The survey calls for a 9% drop in the southeast, 19% in the southwest and 9% in the Mid-South. Both Arkansas and Mississippi project slight increases. Market analysts believe that is in line with what they are hearing from farmers as current prices aren’t high enough to entice plantings.
Chuck Shelby, Risk Management Commodities says, "With higher inputs and with the ability of the cotton producer to go out there and plant other crops I think that might be close to where we end up on cotton acres. At this point in time cotton seems pretty stable in that $85 range give or take but the other commodities are up in price in particular soybeans."
John Payne, Hedge Point Global Markets agrees. "No, I don’t think you’re going to entice any acres in the Delta for sure. 88-cents would be the number. 88 to 90 is what’s needed to really compete with corn and beans at these prices. So, we can throw those out. I think West Texas is a different story. Those folks will plant probably regardless at least a lot of the fringe guys will unless they can get enough moisture to plant something like corn."
Plus, farmers may also be discouraged as the cotton market saw the most volatile trading conditions in over a decade in 2022 and the biggest annual price drop since 2014. In fact, Payne thinks harvested acres for cotton could actually fall below 9 million in 2023 verses 11 million in 2022.
The other factor driving cotton prices will be demand and that’s solely dependent on China. Payne thinks demand will pick up in the second quarter of 2023 as China pushes forward with easing their COVID restrictions and fully reopens its economy.
