* Cotton prices, costs discourage U.S. sowings
* Soybean, corn more attractive for farmers
By Rene Pastor
ORLANDO, Florida Jan 3 (Reuters) - - U.S. farmers are expected to plant less cotton in 2012 as a decline in prices to below $1 per lb and escalating costs of key inputs such as fuel make it more attractive to sow corn and soybeans.
U.S. cotton plantings will range from 12 million to 13.5 million acres (4.9-5.5 million hectares), down 8 percent to 18 percent from last year's 14.72 million acres, industry participants forecast before the annual Beltwide Cotton conference here.
A Reuters survey on plantings will be released later in the conference.
The drop in U.S. cotton prices from record highs above $2.20 a lb in March to around 85 cents <0#CT:> in December will make it difficult for cotton to battle corn and soybeans for acres, traders and analysts said.
"I don't think 85-cents cotton can compete with corn and soybeans," Carl Anderson, an influential economist who is professor emeritus at Texas A&M University, told Reuters. "Cotton has also become a very expensive crop." (Graphic: U.S. cotton plantings, 1998 to 2011: http://link.reuters.com/wyp75s)
LOW PRICES, RISING COSTS
Prices have clawed back some lost ground, ending the year around 91 cents per lb, but analysts said prices need to be above $1 a lb before farmers would consider a return to cotton.
And a recovery to that level may be unlikely in time for spring planting season from March to early June, they said.
"Cotton loses a lot of its attractiveness globally below 85 cents," said Mike Stevens, a long-time trader based in Mandeville, Louisiana, who now operates independently.
Consensus in the trade is for planted acreage in the United States to fall by between 1.5 million and 2 million acres, he said. This would equate to a range of 12.72 million to 13.22 million acres.
Cotton will also struggle to compete while soybean prices <0#S:> are above $11.50 a bushel and corn <0#C:> stays above $6 a bushel, Peter Egli, director of risk management at trader Plexus Cotton Ltd, said.
"As long as soybeans can hold $11.50 and corn can hold $6, people will still go into corn or soybeans," he said. "This is not a convincing price for cotton."
Cotton futures were the weakest-performing commodity in 2011, losing over a third of their value from end-2010 levels, Thomson Reuters data showed. (Graphic: 2011 performance of cotton: http://link.reuters.com/xex75s)
This is in stark contrast with its over 90 percent rise in 2010, when cotton was the second-biggest gainer in the commodity complex.
It is not just lackluster prices that make cotton less appealing. Higher costs for equipment and fuel also make it more expensive for farmers to sow fiber.
A new cotton harvesting machine would cost some $600,000, double the price of a comparable combine for corn, soybeans or wheat, Anderson estimated.
"That's too big an investment for farmers to think about," he said.
High fuel prices take a big toll on cotton farmers, who must use fuel-hungry harvesters and large amounts of fuel-derived fertilizers to boost yields, analysts said.
In arid areas such as Texas, the biggest cotton growing state, they also use deep fuel-fired wells to draw out irrigation water for their crops.
LOWER YIELDS
In 2011, farmers in the United States planted 14.72 million acres to cotton, the highest in five years in direct reaction to prices hitting their highest level since the U.S. Civil War in the 19th century.
But the worst drought in a century in Texas and prolonged dry spells in Georgia, the No. 2 cotton state, led to nearly 5 million acres being abandoned. The U.S. cotton harvest stood at 9.85 million acres, the U.S. Agriculture Department said.
The result of the drought in the southwestern and southeastern United States caused cotton yields to drop to 711 lbs/acre, which USDA figures showed is the lowest in eight years.
