NEW YORK, Mar 29, 2010 (Dow Jones Commodities News via Comtex) -- U.S. cotton acreage in 2010 is expected to increase due to strong prices for the commodity, reversing several years of acreage declines.
The average of analysts' estimates for cotton plantings is 10.44 million acres, up 14% from the 9.15 million acres planted the year before, according to a Dow Jones Newswires survey.
The U.S. Department of Agriculture is scheduled to release its prospective plantings estimates for cotton and other row crops at 8:30 a.m. EDT on Wednesday.
Acreage for cotton had fallen in each of the past three seasons in part because farmers chose to plant other crops, such as corn or soybeans. In previous years, corn and soybeans were higher-priced compared to cotton, and therefore offered farmers higher potential returns. Producers look at futures prices for the new-crop contracts to gauge possible returns on planting investments.
The tables have turned in 2010, however.
Analysts said ICE Futures U.S. December cotton contracts, which represent the crop to be planted this spring, are strong compared to comparable new-crop grains contracts at the Chicago Board of Trade.
Cotton prices have been rising as textile mills rebuild inventories depleted during the recession and as consumer demand for textiles begins to rebound. This increased demand comes at a time when cotton supplies are tight, particularly in the U.S. Current ending stocks, essentially the surplus, in the U.S. are projected at just 3.2 million bales.
Since setting a low on Feb. 5, December cotton futures have risen 9.2%, settling at 75.04 cents a pound on Monday. During the same timeframe, CBOT December corn fell 0.1% and November soybeans rose 2.4%.
The average analyst estimate of 10.44 million acres is roughly on par with what the USDA projected earlier this year, and slightly higher than private estimates.
In February, the USDA projected planted area of 10.5 million acres in an outlook released at its annual agricultural outlook forum. That projection, however, was not based on a survey of producers, as Wednesday's prospective plantings forecast is.
Also in February, the National Cotton Council projected cotton acreage at 10.093 million acres, based on its early intentions survey conducted in December and January.
Private analytical firm Informa Economics earlier this month projected 2010 U.S. cotton planted area at 10.30 million acres.
