The U.S. Department of Agriculture on Wednesday boosted its outlook for 2010 cotton plantings by 15% from last year.
The projection came in near analysts' pre-report estimates and yielded a muted market response as the larger estimate had been factored into prices.
The USDA said farmers intend to plant 10.505 million acres of cotton in 2010, compared to 9.149 million acres the year before.
"The intentions report is not going to change anybody's mind," said Mike Stevens, an independent cotton analyst and broker based in Mandeville, La.
Cotton prices on ICE Futures U.S. rose following the release of the data, but those gains eroded as trading progressed. At 9:57 a.m. EDT, cotton for May delivery was up 0.09 cent at 79.63 cents a pound. Earlier, May cotton had touched an intraday of 80.55 cents following the report.
Cotton acreage had declined in the past three years as farmers planted higher-priced alternative crops, including corn and soybeans. However, recent strong cotton prices relative to other crops is thought to have encouraged more producers to plan to sow cotton in spring 2010.
Growers intend to increase planted cotton area in all producing states except Arkansas, Kansas and Louisiana, the USDA said.
The largest increase is in Texas, where producers are projected to plant 5.618 million acres of cotton, up from 5.018 million acres in 2009, according to the report.
The USDA estimated U.S. planted upland cotton acreage at 10.315 million acres, up from 9.007 million acres planted in 2009.
The USDA projected U.S. producers would sow 190,000 acres of the Pima cotton variety in 2010, up from 141,700 acres the year before.
The cotton market will now key in on weather conditions in U.S. planting areas, as well as relative price ratios with corn and soy, said John Flanagan, president of Flanagan Trading Corp. in Fuquay-Varina, N.C.
May cotton futures are likely to trade within the 79-83 cent range, Stevens said. Spread trade is strong as rolling from the May to the July contract is noticeable, he said.
