By Leslie Josephs
Feb. 9, 2014 5:51 p.m. ET
WASHINGTON—U.S. farmers are expected to plant more cotton this spring than they did last year and reap a crop almost one-quarter larger than the previous harvest, an industry group said.
Farmers hope to benefit from prices that have gained more than 7% from a year ago, but the projected production increase from the world's biggest cotton exporter could reverse that price rally.
"The market for this next year is a big incentive for the raising of cotton," said Tom Lahey, a fourth-generation farmer in Moscow, Kan. Mr. Lahey plans to plant 6,000 of his 14,000 acres with cotton, almost twice as much as last year.
He isn't alone. This spring, U.S. growers will likely plant 11.26 million acres with cotton, an 8.2% increase from last year, and reap a crop of 16.37 million bales, more than 24% bigger than this season's, according to a survey of farmers conducted by the National Cotton Council, the industry group, presented over the weekend.
The forecast is a turnaround for the U.S. cotton market and could boost global supplies of the fiber. Many U.S. cotton farmers last year opted to grow other crops such as corn and soybeans after cotton prices fell in 2011 and 2012.
Coupled with inclement weather, in 2013 that led to the smallest U.S. harvest in four years and pushed up prices. The price of U.S. cotton traded on the ICE Futures U.S. exchange ended Friday at 87.47 cents a pound, compared with 81.40 cents a year ago.
The area planted in Kansas, Oklahoma and Texas, which account for more than half of U.S. cotton acreage, is expected to rise 12% from the previous year, the council said. About 1,000 farmers responded to the council's survey in December and January, from which the organization created its forecast for planted acreage.
Global production will likely rise as a result of more cotton from the U.S. and other major growers including Pakistan and Uzbekistan, the council said in a report. However, the group expects output from China and India, the two largest cotton growers, to fall.
World cotton production is projected to rise to 118 million bales in the 2014 crop year, which begins in July, a 200,000-bale increase over the previous season, the NCC said.
Still, many Northern Hemisphere producers base their decisions to plant on the December futures contract, which usually corresponds to cotton harvested in the fall. Cotton for delivery in December is trading about 10 cents lower than the March contract on ICE, so some farmers are hesitant to expand acreage.
"It's a dime less," said Tim Crosby, a farmer based in Pavo, Ga., adding that he doesn't plan to expand his 3,000 cotton acres this spring. "It's going to be too low."
Others think the additional U.S. production will knock prices lower long before the December contract expires.
"I think it is bearish" for prices in the near term, said Jordan Lea, a cotton trader at Eastern Trading Company, a merchant based in Greenville, S.C., referring to the NCC's estimate.
Robust supplies won't be absorbed even if textile mills are operating at capacity, Mr. Lea said.
